Purex Corporation, LTD.

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

IN THE MA'IR OF PUREX CORPORATION, LTD.

Docket 6008. Com.pl int July 14, 1952,.Decision, Aug. 24, 1954 Dismissal for lack of substantial evidence of complaint charging a manufacturerin California with discriminating in price in violation of subsec. 2 (a) of the Clayton Act as amended in the sale of its "Purex" household bleach and Trend" detergent through offering deals, allo\yances, rebates, and other special discounts in certain sales territories which \were not offered ill other contiguous areas.

Before Mr. John Lewis hearing examiner.

Mr. Austin H. Forkner, Mr. William O. Kern, flfr. Andrew O. Good/wpe, Mr. Eldon P. Sclm,p andllfr. Francis O. Mayer for the Commission.

Gibson, Dunn O,o,dcher of Los Angeles, Calif. , and Halfpenny, Hahn Oassedy, of iVashington, D. C., for respondent. ORDER OF THE CQ)-fMISSION The hearing examiner having filed his initial decision herein and counsel supporting the complaint having seasonably filed a notice of their intention to appeal from said initial decision, and the time within which counsel supporting the compl"int could file their appeal brief having been extended by orders of the Commission to and including August 23, 1954; and Counsel supporting the complaint having filed on August 23, 1954 a notice of their determination not to perfect their said appeal; and No appeal brief having been filed within the time so provided: Now therefmo pursuant to Rules XXII and XXIII of the Commission s Rules of Practice, the attached initial decision of the hearing examiner did al1tomaticalIy, on August 24, 1954, become the decision of the Commission.

INITIAL CISIOX BY JOHN LEWIS, HEARING EXAMINER Stateme:KT OF THE CASE The Federal Trade Commission issued its complaint against the. above-named respondent on July 14, 1952, charging it with having violated Section 2 (a) of the Clayton Act, as amended by the Robinson-Patman Act, by discriminating in price between different customers of its product, Purex bleach, with resultant injury to competition in both the primary and secondary lines of commerce. Saidre- , .

PEREX CORP. LTD. 101 100 Findings spondent, after being duly served with the complaint herein, filed its answer in which it admitted, in substance, having charged certain prices as alleged in the complaint, but denied having engaged in any discrimination in price between different purchasers and denied that its pricing practices resulted in any injury to competition. Said answer also sets forth certain affrmative defenses under Section 2 (a) and (b) ofthe Act.

Pursuant to notice, hearings were held before the undersigned hearing examiner, duly designated by the Commission to hear this proceeding, as follows: From October 15, 1952, to October 25, 1952, at Los Angeles, California; from March 3, 1953, to March 7, 1953, at Minneapolis Minnesota; and from March 11, 1953, to March 14, 1953 at Memphis, Tennessee. At said hearings testimony and other evidence were offered in support of the allegations of the complaint counsel supporting the complaint, which testimony and evidence were duly recorded and filed in the offce of the Commission. Respondent was represented by counsel at said hearing, and, together with counsel supporting the complaint, received full opportunity to be heard and to examine and cross-examine witnesses.

At the close of the evidence offered in support of the complaint, further hearings were suspended pending the filing by respondent of mot.ions to strike certain testimony and to dismiss the complaint herein for insuffciency of evidence. Said motions were thereafter filed, on June 15, 1953, together with a brief in support thereof. A brief in opposition to said motions was filed on July 31, 1953, by counsel supporting the complaint, and counsel for respondent, pursuant to leave granted, filed a reply brief on September 15, 1953. Said motions are disposed of in accordance with the findings and conclusions hereinafter made.

Upon consideration of the entire record herein and from his observation of the witnesses, the undersigned hearing examiner makes the following:

FINDINGS OF FACT I. The business of respondent Respondent is a California corporation with its principal offce and place of business in South Gate, California. It has been engaged since 1936 in the manufacture and sale of a number of household products the principal one of which is a bleach called "Purex." Respondent owns or leases plants for the manufacture and sale of Purex bleach at South Gate and San Leandro, California; Tacoma, vVashington; St. Louis, Missouri; Dallas, Texas; :New Orleans, Louisiana; Atlanta Findings 51 F. T. C.

Georgia; and Memphis, Tennessee. Its product, Pnrex bleach, is distributed generally in approximately 75 percent of the tel'itory of the United States, embracing about 33 states having about 52 percent of the population of the United States, with little or no distribution in the Eastern and Atlantic Seaboard states. As of June 30, 1951, its net yearly sales of all its products totalled $19 476 366. Respondent distributes and sells its products to grocery jobbers cooperative buying organizations and retail stores, located in various States of the United States. In the distribution of its products respondent operates through brokers appointed by it in most of the areas where it operates. It divides the areas where it operates into separate territories with a broker in each tel'itory, except that it employs no broker in its South Gate or St. Louis tel'itories. Each brokerage territory is drawn along geographic lines to conform as nearly as possible to natural marketing areas. Thus, where a natural marketing area includes sections of more than one state, respondent endeavors to include all of such sections within the same brokerage territory. An example of this is its Davenport territory, which includes DaVfmport, Iowa, and Rock Island and J\1oline, Illinois, and the marketing areas contiguous to these three cities.

Sales ate promoted by salesmen of respondent' s brokers, and also by a corps of so-called specialty salesmen employed by respondent who call upon various jobbers and retail outlets. "There sales are made by respondent's specialty salesmen directly to the retaij stores the particular jobber through whom the retailer normally buys receives credit for the sale.

The bleach industry is characterized mainly by small and mediumsized companies. The only company having a national distribution is the Clorox Chemical Company of Oakland, California. Respondent is the second largest manufacturer in the industry. Of the remaining companies, some are purely local in character, operating in a single trade territory, while some of the medium-sized companies operate in a number of trade tel'itories and states. Although respondent has been a significant competitive factor in most of the markets where it has operated, it has been outranked by its smaller competitors in a number of the markets. Thus in the Des Moincs territory the dominant bleach company has been and is S & S Cleanser Company, which is a purely local company. In the :L\inneapolis territory, the predominant bleach is manufactured by the Bilex Company, which is a' mediumsized company operating in a number of mid-\vestern states. , PL'REX CORP. LTD. 103 100 Findings II. Background and issues The gravamen of the discrimination charged in the complaint is that respondent has offered certain price reductions from its list prices mainly in the form of special deals, in certain of the territories where it sells, which have not been oil'ered in other tel'itories. :Many of the so-called deals atc in the form of "free goods " i. e., respondent oilers to sell a case of bleach without any charge with each purchase of a given number of cases. This has varied from a free case with each 10 cases purchased to a free case with each two cases purchased. (In discussing such deals hereafter they wil be referred to in abbreviated form, as e. g. one free with nine" or " " meaning one free case with each nine purchased. ) Some deals ,do not involve any outering of free goods, but are in the form of stipuhttedreduction from the list price, usl1ally varying from 10 cents to 25 cents per case, and, in a few instances, to as much as 50 cents per case. Some of the deals are arranged so that only the wholesaler (or large direct retail account) receives the deal, the customer having the discretion whether to pass on t.he price reduction accruing from the deal. Other deals are arranged so that the consumer and retailer also receive the benefit of the deal. An example of the hltter is the so-called 2-1 deal, in which the consumer receives a reduction of 5 cents on purchase of a gallon of Purex, 3 cents on a half-gallon, 2 cents on a quart, and 1 cent on a pint. The jobber receives an equivalent reduction per case as follo\vs: 20 cents per case for gallons, 18 cents for half-gallons, 24 cents for quarts and 24 cents for pints. Some deals are strictly retail dealers, in which orders are obtained from the retail stores by respondent's specialty salesmen, and the jobber through whom the sale is billed receives a nominal fee for the handling of the free goods, usually amounting to 10 cents a case. An example of a COnSUll1er-type deal is one in which the consumer willreceive a quart free or for one cent, upon purchase of a half-gallon at the regular retail price. In this type of deal, the retailer is supplied with a case of quarts free with each two cases of hah-gai1ons purchased. Sometimes a coupon is distributed which must be presented at the retail store. The coupons are redeemed by respondent at one cent over the dealer regular retail price.

Some of the deals have been offered tor brief periods at time, such as a month or two. Some of such deals have been reoiIered in the same or a different form, after an interval of several months. Other deals have remit1ncd in effect for over a year. Although respondent has not yet o:flered its evidence, it seems apparent, from the record Findings 51 F.

thus far, that competitive factors and consumer acceptance are the determining factors in the extent and duration of such deals. Whenever a deal is offered by respondent, all customers in a given territory are offered the deal without distinction. However, the same deal is not offered simultaneously in all territories. Thus, one territory may have a 1-9 deaJ, another a 1-3 deal, and another may have no deal at all. The basis of the discrimination charged in the complaint is, in essence, that respondent does not offer the same deal simultaneously in all of its territories.

The record at the close of the case-in-chief of counsel supporting the complaint consists of approximately 3 000 pages of testimony and several thousand pages of exhibits. Although the complaint alleges injury to competition in both the primary and secondary lines of commerce, the great bulk of the evidence relates to primary-line injury. Such evidence, adduced mainly through competitors of respondent and wholesalers, relates particularly to the following brokerage territories or divisions: l\linneapolis, Omaha, Sioux Falls Sioux City, Davenport, Des Moines, Memphis and Dallas. Certain evidence, mainly in the form of correspondence, was also offered in an effort to show injury between customers of respondent along the fringes of brokerage territories where a customer in onc territory received the benefit of a deal and a competitor in the adjacent territory did not. Although the complaint refers to another product of respondent, a detergent called "Trend " and counsel supporting the complaint offered evidence showing that respondent had oflcred deals on "Trend" similar to those on Purex, no evidence of actual or probable injury to competition with respect to the sale of Trend was oflered.

The main issue in this case is whether respondent' s pricing practices have adversely affected, or may reasonably be expected to have such an effect on, competition between respondent and its competitors. In connection with the disposition or this issue, there are a number of preliminary questions which must first be disposed of: (1) whether respondent' s pricing practices are discriminatory, (2) what is the proper test of injury in a primary-line case, and (3) whether the commerce requirements or the Act have been satisfied with respect to the alleged discrimination charged in the Dallas, Texas area. There must also be disposed of respondent's motion to dismiss a considerable portion or the testimony or some or respondent's competitors on the ground that such testimony is unreliable hearsay. The final question for decision is whether the evidence of secondary- PUREX CORP. LTD. 105 100 Findings line injury in a few fringe areas is suffcient to justify a finding of violation of Section 2 (a).

III. The legal questions A. The question of discrimination Respondent contends that since the mllawful couduct refer'ed to in Section 2 (a) is the discrimination in price between different customers, something more than a mere differerwe in price between customers must be shown in order to esta.blish such discrimination; namely, there must be a competitive relationship between the purchasers, entitling them to equal treatment. Respondent, accordingly, argues that while there may have been differences in the net prices in its different territories resulting from the operation of different deals, this did not result in any discrimination among its customers since the customers in its different territories were not, with minor 'exceptions, in competition with one another and therefore were not entitled to equal treatment.

Respondent' s position finds some support in the legislative history of the Robinson-Patman Act. Thus, we find the following statement by Congressman Utterbach, one of the managers of the bil in the House:

'" '" .. a discrimination is more than a mere difference. Underlying the meaning of the word is the idea that some relationship exists between the parties8 to the discrhnhwt'ion which ent'items them to equal tn atment whereby the difference granted to one casts some burden or disadvantage upon the other. If the two are competing in the resale of the goods concerned, that relationship 'exists, Where, also, the price to one is so low as to involve a sacrifice of some )Jart of the seller s necessary costs and profit as applied to that business leaves that deficit inevitably to be made up in higher prices to his other cus tamers; and there, too, a relationship may exist upon which to base the charge of discrimination. But where no such relationship exists where the goods are -801d in different markets and the conditions affecting those markets set different price levels tor them, the sale to different customers at those difjerent prices 1.ould not constitute a diBcrirninatiomi within the meaning of this bil (italics nppliedJ (80th Congo Rec. 94Hi), Further cited by respondent in support of its position is the following colloquy between Congressmen Boileau and Miller, the latter being one of the managers of the bill in the House: Mr, BOILEAU, * * * Mr. Chairman, for the purpose of clarifying the conressional intent, I have taken this time to get the opinion of the distinguished gentleman from Arkansas as to his understanding of the meaning of the language at the beginning of section 2 (a), page 5, of the bill * .. . My understanding ot that languaoe is that the sellers rnay not discriminate, ?mt they may, nevertheless, charge difje?'ent prices in different communities to Findings 51 F.

persons who are not competitors. In other words, as I understand it-and I ask the gentleman whether or not this is his opinion-a seller may sell a commodity in one community at one price and sell it in another community at a different price, beea use those two purchasers, even though they are purchasers for resale, are not competitors, and therefore, there is no discrimination in price. Is that the understanding of the distinguished gentleman from Arkansas (Mr. MilerJ? Mr. MILLER. They are operating in d-ifferent markets. I do not think there is any doubt about the language.

Mr. BOILEAU. I am asking these questions at the request of certain farm organizations, and I want to show the Congressional intent. Mr. MILLER. As indicated by the gentleman from Nebraska (Mr. Mc- Laughlin), the gentleman from Iowa Plr. Utterback), the gentleman from Nebraska (Mr. McLaughlin), the gentleman from Michigan (Mr. Michener). and some others were appointed as a special subcommittee to work on this bil. That was our understanding. We undertook to draft a bil that would deal with the three principal things with which we are all familar. It was not our intention to injure the organizations about which the gentleman is speaking. The gentleman has the right interpretation of the bill. Mr. BOILEAU. In this particular letter, which refers to this particular sec tion, I quote as follows:

'Ve are fearful that this section, viewed in the light of the committee report might . be construed to mean that different p,-'ices could not be chaTged by the same seller in different markets.

Is it the gentleman s opinion that their fears in this respect are without foundation? r. MILLER. They are entirely unfounded (italics supplied) (80th Congo Hee. 8229).

1Vhile the foregoing are indeed persuasive, as are the other authorities cited by respondent, the examiner cannot agree with respondent's position on this issue. Such statements must be read in the light of the general purposes or the Robinson-Patman Amendment, which, as respondent itself points out, was "aimed at abuses in buying power rather than at selling power. Insofar as the Robinson-Patman Act makes it uula wful "to discriminate in price between different purchasers " the language used is identical with that in the original Clayton Act. Congress having used identical language in this respect as that contained in the original Clayton Act, it must be assumed, in the absence of clear evidence to the contrary, that it intended to give it the same meaning which it had under the original Act. The statements from the legislative debates, above quoted, merely reflect the concern with the evil of price discrimination between large and small purchasers. I-Iowever, there is no convincing evidence that Congress while endeavoring to strengthen the Act with respect to abuses of buying power, intended to weaken it insofar as the Clayton Act attempted to address itself to certain abuses of sellng power, one of , PUREX CORP. LTD. 107 100 Findings ,which was selling at different prices to noncompeting customers in different parts of the country in order to drive out or minim:ize competition. That the latter was an evil at which the Clayton Act was aimed is apparent from the following statement in the report of the House Judiciary Committe.e:

Section 2 of the bil is intended to prevent unfair discrimination. It is expressly designed with a view of correcting and forbidding a common and widespread trade practice whereby certain great corporations and also certain smaller CODseems "" * * have heretofore endeavored to destroy competition and render unprofitable the business of competitors by sellng their goods, wares, and merchandise at a less price in the particular communities where their rivals are engaged in business than at other places throughout the country (H. R. Rep. No. 627, 63d Congo 2d Sess., p. 8).

,Vhat.ever merit there may be in respondent' s position, as an original proposition! it seems to be now wen settled by court. oecisions that differences in price in different sec60ns of the country between noncompeting customers may constitute discrimination. This inteTpretntion has been applied in cases arising under the Robinson-Patman Amendment, as well as those arising under the original Act. Tho classic example of such price dift'erences between noncompeting customers being considered discrimination is the Porto Rican AmeJ' ican Tobacco Oornpanycase,I which involved a price differential betwecn customers in Puerto Rico and those in the United States. The court referred to the American Tobacco Company as having, by such price difference discriminated in price between different purchasers-those of the United States and of Porto Rico. Clearly the different purchasers were not in competition or in "some relationship entitling them "to equal treatment " but the price diIrerences were nevertheless regarded as discriminatory. :l\ore recently in 1l1uller V8. F. T. 0. 142 F. 2d 511 (C. A. 6, 1944), arising under the Robinson- Patman Act, a difference in price between customers in the New Orleans area and those in other parts of the count.ry was assumed to be discriminatory, the main issue being whether such discrimination had resulted in injury to competition. That a mere difference in price may constitute discrimination under the Robinson-Patman Act seems to have been accepted by a number of the authorities in the field. Thus Congressman Patman, in his book "The Robinson-Patman Act" (1938), addressing himself to the precise question of whether "the \"Vorc1 'discrimination' (isJ synonymous \'with ' cliff' crent' as applied to prices " gave the following answer (p. 24) : Porto Rican American 'Tobacco Oompany 'V8. American Tobacco Oompany, 30 F. 2d 234 (C. A. 2, lf129), Cert. den. 279 U. S. 858. 108 FEDERAL TRADE CQMMISSIOK DECISIONS Findings 51 F. T. C.

The statement that it shall be unlawful to discriminate in price is of the same effect as to say that it shall be unlawful to make a different price. To the same effect, see Cyrus Austin Price Di8cri17 ination under the Robinson-Patman Act (March 1952), pp. 18- , 86. ",Vhile a mere difference in the prices charged to customers in different areas may be regarded as discrimination, even though the. customers are not in competition with one another, this does not necessarily make such differences illegal. Aside from the fact that such differenccs may be justified under Section 2 (a) and (b) of the Act, it must be established that the discrimination has resulted, or may reasonably be expected to result, in injury to competition of the type set forth in Section 2 (a). The nature of such injury is the subject to. which the examiner now turns.

B. The questi()n of 'injwy to competition A more serious question presented has to do with the criterion to be followed in determining whether a discrimination in price has injured or may reasonably tend to injure competition. It is the position of respondent that where a seller charges difierent prices to noncompeting purchasers in different geographic areas, the test of whether there has been or ma.y be injury to competition is whether there exists a predatory intent, collusion or monopolistic practices. " 2 Counsel supporting the complaint, on the other hand, argues that the Robinson- Patman Act was intended to reach discriminatory practices resulting in injury to a single individual (competitor J * * *" and that it is not necessary to show injury to "competition generally" as it was under the original Clayton Act. Thus, we find respondent contending for a test which ,"ould require a showing that the difference in price was part of a purposeful scheme to drive competitors out of business or that it tended substantially toward the creation of a monopoly, while counsel supporting the complaint argues for a test which would require a showing merely that a single competitor had been injured. Since the voluminous evidence on injury to competition must be evaluated in the light of some proper legal criterion, it is necessary to determine ,,,which of these tests is the correct one, or, in fact, whether either of them is accurate.

Althougb respondent contended, Initially that there could be no discrimination unless.'; there WRS some relationship between the purchasers entltling them to equal treatment, it apparently concedes for purposes of this discussion, that a price difference between noncompeting customers may be dlscrimjnatory, providing the nece!"sary showing of injury.' is made, PUREX CORP. LTD. 109 100 jndings Price discrimination is within the prohibition of the statute: .. * .. where the effect of such discrimination may be substantially to lessen competition or tend to create monopoly in any line of commerce or to injure destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with the customer of either of them .. .. (italics supplied).

The italicized language is the portion added to the original Clayton Act by the Robinson-Patman Amendment of 1936. It is this portion which counsel supporting the complaint claims liberalized the test from one of showing injury to "competition generally" to merely requiring the showing of injury to a "single individual" competitor. An examination of the legislative history discloses that there is some support for the position taken by counsel supporting the complaint. Thus, we find the following statement by Congressman Utterbach, as part of the same explanation of the bil to which reference has previ ousl y been made:

The discriminations prohibited by this bil are those whose effect may be: 1. Substantially to lessen competition in any line of commerce; or 2. To tend to create a monopoly in any line of commerce; or 3. To injure, destroy, or prevent competition: (a) With any person who either grants or knowingly receives the benefit of such discrimination; or (b) With customers of either of them 0. e., the grantor or grantee). Effects nos. 1 and 2 above correspond to those required to be shown under the old section 2 of the Clayton Act. Generally speaking, they require a showing of effect upon competitive conditions generally in the line of commerce and market territory concerned as distingu,ished tram the effect ot the discrimination upon immediate competition with the grantor or grantee, The difference may be ilustrated where a nonresident concern opens a new branch beside a local concern, and with the use of discriminatory prices destroys and replaces the local concern as the competitor in the local field. Competition in the local field generally has not been lessened, since one competitor has been replaced by another; but competition with the grantor of the discrimination ha,s been de:stroyed. The present bul is, therefore, less rig01ous in its provisions as to the effect required to he shou-'1 in order to bring a given discrimination within its prohibiti011s (italics supplied) (80th Congo Rec. 9417), The ilustration given by Congressman Utterbach suggests that injury to a single competitor of the seller may be suflicient to injure competition with the latter. However, it is possible to interpret the Congressman s reference to "the use of discriminatory prices" as contemplating a situation where the seller is selling at different prices to competing buyers in the same loca) area rather than at the same price to all buyers ' in the a1'ea.

3 See Congressman Utterbacb' s definition of discrimination 8UIJ1" as Involving a situation where there Is a competitive relationship between the purchasers. 110 FEDERAL TRADE COMMISSION DECISIOXS Findings 51 F. T. C.

Counsel in support of the complaint further cites, as upholding his position, a statement in the Committee Report of the Senate Committee on the Judiciary to the effect that the change in the language of Section 2 referred to above- * .. '" accomplishes a substantial broadening of a similar clause now contained in section 2 of the Clayton Act. The latter has in practice been too restrict1:e, in requiring a sho1,cing of geneml injury to competitive conditions in the line of commerce concerned; whereas the more immediately important concern iB inj1(' V to the competitor victimized by the discriminaUon. Only through such injuries, in fact, call the larger general injury result, and to catch the weed in the seed wil keep it from coming to flower (italics supplied) (Sen. Rep. No. 1502 74th Cong., 2d Sess. (1936), p. 4).

Substantially identical language appears in the Report of the House No. 2287, 74th Cong. , 2c1Committee on the .Tudiciary (H. R. Rep. Sess., p. 8) .

Respondent argues that such expressions of legislative intent must be viewed in the light of the general objective of the Robinson-Patman Act, viz., to prevent abuses by large buying groups which the original Clayton Act was not thought effectively to prevent, and that there was no intent to change the law insofar as competition among sellers is concerned. This position also has considerable support in the legislative history. Thus, in the same Report of the Senate Committee quoted by Counsel supporting the compla.int, we find the following statement with respect to the general purpose of the Act. The bil proposes to amend sedion 2 of the Clayton Act so as to suppress more effectively disc'/'iminat- Ions 1Jeuveen C'I, stomcrs ot the same seller not supported by sound economic differences in their business position or in tbe cost of serving them (Senate Rep. :-TO. 1502, 74th Cong. , 2d Sess., p. 3) (italics supplied). Further supporting respondent's position is the following statement by Congressman Patman, co-author of the bill: Wbllt are the objectives of this bil? Mr. Chairman, there has grown in tllis country a policy in business that a tew 1 ich, pou;erfll1 organizations by ca.son of Olei/" size (ljl their alJility to coerce and intImfdrde manllfact1l.ers have to'reed those manu.jactuTers to give them their goods at a lower price than they give to the il/depend, cnt merchants under the same and similar circumstance and fa!' the same quantities of goods. Is that right or wrong? It is wrong. '\Ve are attempting to stop it, recognizing the right of the manufacturer to buyc a different price for a different quantity where there is a diiIerence in the cost of manufacture. (Italics supplied. (80th Congo Rec. 8111). that the proposed bill was: Congressman Patman further stated * '" '" designed to accomplish what so far the Clayton Act has weakly attempted, namely, to protect the independent merchant the public whom he serves and the manufacturer from whom he buys from exploration by 11 i-s chain c011petio?' (Italics supplied. (79th Congo Hec. 9078). PUREX CO RP. LTD. III 100 Findings It is apparent from the foregoing that what Congress was concerned with was the evil of the large buyers forcing manufacturers to give them favored price treatment as against their smaller competitors, rather than with territorial price differences initiated by manufacturers for their own purposes.

In support of its argument that the R.obinson-Patman Amendment was not intended to change the test under the Clayton Act, insofar as competition between seners is concerned, respondent cites statements made by Congressman Patman in his book The Robi,n.son- Patman Act. While the Congressman s book is not technically a part of legislative history, his views are significant as reflecting the understanding of a co-author of the bill. Thus, at page 59 of the book there appears the following a.answers to questions submitted to the Congressman, involving the question at issue: Question. Can I sell at different prices to different customers in different cities who are not in competition with each other? Opiniun. Yes, so long as the sale is not below cost. 'There would be no dis. crimination within the application of the Act unless a deliberate attempt were made to destroy, or 8u:'bstant' ially lessen, cornpetUion in some locality, or in pri mary Une8 at commerce.

Question. Is it a price discrimination under the Act for a manufacturer to sell either to a "\vholesaler or retail buyer, at a point say in Vermont, at a different IJrice than a buyer doing a similar type of business in ::\iami, Florida ' Opinion. If the two stated customers do not regularly overlap in their normal trading areas, there would be no discrimination within the provisions of the Act, less purposcjztlly low prices 'Were maintained in order to destroy competf. tion. (Italics supplied).

In the opinion of the hea,ring exa,miner, the legislative history does not sustain the position of counsel supporting the complaint that the Robinson-Patman Amendment was intended to protect individual competitors from injury. ,V11ile some of the statements referred to by counsel do give some support to this position, they must be viewed in the light of the fact that the attention of Congress 'vas focused on protecting the independent merchant from his larger competitors. At one time there had been some question \vhether the Clayton Act was even applicable in aseeondary-line injury case. ,Vhile this ques. 4 there stillcion has been settled by the American Can C01npany case appeared to be some question as to hmv much of a showing of injury was required to establish injury in a secondary-line case, It was in the light of this background that the Robinson.Patman Act was enacted.

GeoTgfJ Fa.n Camp ct Sctla Co. v. American Can Company, 2iS U. S. 2G5. 4237S8-58- 112 FEDERAL TRADE CO);L\ISSION DECISIONS Findings 51 F. T. C.

However, while Congress intended to insure that the enforcement of the act was not frustrated by the requirement for a generalized showing of injury, it was not its intention, in the opinion of the examiner, to liberalize the test of injury to the extent of making it one of injury to an individual competitor. The language used in the amendment, it may be noted, refers to injury to competition with the grantor or grantee of the discrimination and to injury to a competitor of the grantor or grantce of the discrimination. The fact that a competitor has been injured in a local price-cutting case may tend to show that competition with the grantor has been affected but it does not follow in every case that because a competitor has been injured, competition has been affected. It may be argued that to interpret the added language as requiring " showing of injury to competition, rather than to a competitor, is to give the language an interpretation not substantially different from that part of the original Clayton Act which (in addition to the test of tendency to "monopoly ) refers to discriminations which may "substantially * * * lcsse,n competition * * * in any line of commerce While this may he true, it does not prove that Congress intended to make the test one of injury to a "competitor . In the opinion of the examiner, the new language was added out of an abundance of caution because of Congress' concern that the requirements under the old Act that there must be a substantial lessening of competition "in any line of commerce, coupled with the reference to monopoly, ha.d been or might be subject to too strict an interpretation.' The language used in the a.mendment reflects the then current Inood for liberalization of the Act, but yet does not evidence an intent of establishing, as the "pplicahle test, injury to an individual competitor. "W"whatever may have been its intent in secondary-line. injury cases with which it was primarily concerned, it is the opinion of the examiner that it was not the intent of Congress to proscribe price differences in different geographical areas merely because of injury to an individual competitor of the grantor.

More recent developments in the dichotomous debate on thc subject of injury to competition versus injury to a competitor reflect a crystallization of views in favor of the former concept, as being the controlling one under the R.obinson-Patman Act. In considering amendmel1ts to the Act as it result of the furor created by the so-called basing-point eases, the house Conference Committee stated its views as fonow::: See. e. g" the reference in Sen. Rep. Ko. 1502 , 74tl1 Cong. , 2d Sess" p. 4 (Iluotpd supra. the effect tlmt the originfl1 langl1l1ge "11r!" in pmctice been (subject toJ too restrietiyc (an interpretation) * * * , PUREX CORP. LTD. 113 100 Findings Competiton is a contest between sellers for the business of a buyer. In such a contest one seller gets the order while other sellers lost the order. That is competition. The seller \vho did not get the order may feel injured, but that does not mean that competition has been injured. In any competitive economy cannot avoid injury to some of the competitors. The law does not, and under the free enterprise system it ('cannot, guarantee businessmen against loss. That busi. neSi?1nen lose money or even go bankntpt does not necessarily mean that competition has been injured. Competition " Mr. Justice Holrnes observed worth what it costs, We must always distinguish between injt("V to competition and injul Y to (1 com.petitor. To promote and protect compeUtion is the primary function of the antitrust laws. However, we cannot guarantee competUors against aU injury. This can only be accomplished by prohibiting competition CH. R. o. 1422, sist Cong., 1st Sess., 1949, p. 5) (italics suppliedJ. In a letter to the Commission dated June 26, 1950, the Senate Committee on Interstate and Foreign Commerce addressed a series of questions to the Commission, including several on the question at issue. Question 11 of these questions specifically asks whether the Commission concurs in the above-quoted statement of the House Committee on the "meaning of the word 'competition " The reply of the Commission was:

Yes. Insofar as the distinction between injury to competitors and injury to competition is concerned, see answer to Question 10. Question 10, to which reference is made in the Commission s reply, and the Commission s answer thereto are as follows: Question 10; Does the Commission regard the purpose and the function of the Clayton Act to be protection of "competition " against injury by price discriminations, or does it regard the purpose and function of that act to be protection of individual competitors against such injury? Answer: As you know, the applicable language of Section 2 is to condemn discrimination in price "where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants 01' knowingly receives the benefit of such discrimination, or with customers of either of them." Thus the controllng statute deals with the protection of "competition. " Because of particular factual situations which may exist, the Commission cannot make the distinction implied in your question in such sweeping terms. To ilustrate this point, you might consider the case of E, B. Muller & Company, et a!. v. Federal Trade Commission (142 F. (2d) 511), in which the Court of Appeals for the Sixth Circuit affrmed an order of the Commission probibitng certain discriminations in price. This 'vas a case in which two alled but sepnrately incorporated companies ,were operatec1 as a unit and had but one domestic competitor. They sought to drive this competitor out of business, and one of the means used was sectional price discrimination. Inhtry to this cmnpetitor sufficient to threa. ten its continued emistr;nce wa.s oovirJUsly inj-ury to cumpetUion tur tll's single CUmlJetUor f'!rnished the only c01npetiHon the nwponrlents had. The Commission does trot 'wish to oe 1./understood as statil1lj that injury to a ('0'11- 114 FEDERAL TRADE CO IMJSSION DECISIONS Findings 61 F.

petitor in all cases constitutes injury to competition. The loss of a single sale as a result of price discrimination obviously constitutes an injury to the competitor who lost the sale, but it does not automatically follow that competition is injured thereby (italics supplied) (Letter of Aug. 14, 1950, to Chairman, Senate Committee on Interstate and Foreign Commerce, by Federal Trade Commission) .

The Muller case, upon which counsel supporting the complaint places reliance, is not authority for the proposition that injury to a competitor is the controlling test under the statute since, as the Commission s answer quoted above indicates, the competitor was the only competition in the area, and injury to it "was obviously injury to competition. " The Court, in sustaining the Commission s order and findings, referred to the fact that the Commission had made a finding that the defendant had sold below cost with intent to injure competition principally in the IV ew OJ-leans territory * * * (italics suppliedJ. Counsel supporting the complaint also places considerable reliance on Moss v. FTO 148 F. 2d378 (C. A. 2 1044), as sustaining his concept of injury. The Court there held that after the Commission had shown sales to different customers at di:llerent prices, the respondent then had the burden of justifying the discrimination. If the hoIcing of this case were to be literally accepted, it would go beyond even the extreme position mged by counsel supporting the complaint in this case, since all that would be required would be a showing of sales to two different purchasers at two different prices, and respondent would then have the burden of showing that there had been no injury or no reasonable probability or injury to competition. The Court's decision in the 111088 case must be read in the light of the findings aetl1al1y made by the Commission on the evidence berore it. The Commission had round that respondent's prices to some or its customers were such that its "competitors could not meet such prices without suffering a loss on such business and in one instance a competitor was forced out or business as a result of such acts and practices or the respondent". On the basis or this finding, the Commission concluded that the effect of such price differences "upon competition with the respondent was and may be substantially to lessen competition with respondent in the sale and distribution of rubber stamps * * *". In a memorandum to the Commission on the subject of primary-Ene injury, the Commission General Counsel has expressed the view that the Court' s decision in the illoss case has "beelouc1ecf' the issue of what constitutes proof of injury in such cases. Alter taking note of the proof of injury offered and the Commission s finding based thereon that the discriminatory prices of respondent "had a substantially injurious effect upon competition, the General Counsel states that the Court apparently mis. . , PUREX CORP. LTD. 115 Findings understanding the Commission s position, stated that the Commission s argument was that having proved sales at different prices this put upon ' * * (Moss) the burden of justifying the discrimination This, however," says the General Counsel is a view which the Commission has never adopted * * * " 6 While the examiner finds himself in agreement with respondent that the test is not Olle of mere inj ury to a competitor, the examiner does not agree with respondent's contention that there must be a showing of "predatory intent, collusion or tendency to monopoly . In support of its position, respondent cites the foi1owing expression of the Commission s policy in geographic pricing cases: Injury to competition which one seller imposes upon another raises few problems since it is a conception which can be traced back to the beginnings of the antitrust laws. It usually arises when the discriminating seller quotes low prices to the customers of his competitors in such a way that he jeopardizes the continuance of effective competition by these competitors and thus tends to acquire a monopoly of the commodity sold. Except where such a tendency towanl monopoly appears the Commission docs not regard an effort to get business from a competitor by sporadic price reductions as ilegally injurious to that competitor. Injury to competition through common use of a discriminatory pricing pattern by sellers appears, as in the Cement case, when discrimination is an inherent part of the collusive al'l'angernent through which competition is set aside. Thus the test of inj1wy on the selling side of the market is to be found 1:n collusion or in tendencies toward monopoly (Emphasis supplied) (Commis sian Policy Toward Geographic Pricing Practices, 3 oon Trade Reg. Rep., par. 412) .

While the views thus expressed do tend to support respondent's position, they must be interpreted in the light of the problem the Commission was discussing, namely, certain geographic pricing systems such as basing-point systems, f. o. b. price systems, and similar systems there discussed. The Commission was evidently seeking to allay fears which had been created that certain court decisions would result in ontIawing all delivered pricing systems, even though there was no eoll usion between the parties using them, and no tendency toward monopoly. In the opinion of the examiner, the type of geographic pricing involved in respondent's territorial pricing system was not within the contemplation of the Commission in the above memorandum, and the examiner docs not regard the views there expressed as entirely controlling here, except insofar as they suggest that injury to individual competitors is not the test under the Act. Certainly there is nothing in the Act requiring any showing of collusion in a primaryline injury case. iVhile the Act does establish a tendency-to-monopoly e Memorandum, General Counsel to Commission, dated Sept. 26, 1952 , p. 6. 116 FEDERAL TRADE COMMISSIO DECISIONS Findings 51 F. T. C.

test, this is the severest of the alternative require,ments for shmving llJury.

R.respondent also cites in support of its position the following expression of opinion by judge Yankwich:

" '" . the object of the antitrust law is to encourage competition. Lawful price differentiation is legitmate means for achieving the result. It becomes ilegal only when it is tainted by the purpose of unreasonably restraining trade or C01t merce or a,ttempting to destroy competition or a competitor thus substantially lessening competition, or when it is so unreasonable as to be condemned as a means of competition (italics supplied) (Balian Ice Cream Co. v. Ltrden Farms Co. 104 F. Supp. 706, S07).

Vhile the examiner finds himself in agreement with the learned court that the existence.e of fl purpose to destroy competi.tion may be illegal, he does not regard the sho\ying of such a. purpose as a since qUlt non to a showing of injury in a primary- line injury case. It should be noted that t.he court was there dealing not only with all alleged Clayton Act violation but one iny()lvillg the Sherman A t as well and 'VHS expressing- himself generany \with respect to the ;' antltrust law, That an intent or purpose to injure or destroy competition is not a necessary element of proof under the Clayton Act see Ins evident from the fact that such a reqnirement appeared in the first draft of the bilJ and was stricken out in the Senate (Sen. Doc. K o. 584, 63d Cong., 2d Sess., 1914, p. 4; Sen. Doc. No. 58;'5 63d Cong., 2d Sess., 1914, p. 3). Turning to the actual wording of the statute, it -",'ill be noted that he requirement for showing of injury is satisfied if the effect of the discrimination charged "may be to substantially lessen competition :; :; * in any line of commerce, or to injure, destroy, or prevent competition with" the grantor or grantee of the discrimination. The diiIerence between these h\"o concepts, if there be one, is slight since the Commission has interpreted the word "substantially " as modifying both phrases in this portion of the Act,7 The examiner has already indicated above his views as to why the 1rtter test was inserted in the Act. While the line of demarcation between the concept of substantial jnjury to competition in any line of commerce, and that of substantial injury to competition with the grantor of a discriminatory price may 7 In the memorandum of the Commission s General Counsel. referred to above (Footnotf! 6), the statement is made (p. 2) :

"* .. .. in the Commi sion s view, the standard of quDstantiality of effect in both the primary line and the secondary line " '" * was the correct one to follow also under the statute, as amended by the Robinson-Patman Act 'I'" (italics suppliedJ. See also Austin Price Discrimination 1mrlej' the Robinson-Patman Act where the author states (p. 42) :

The word ' substantially, carried over from old Section 2 , also limits tlle w()rd added by the Robinson-Patman Act. The discrimination must be one the effect of which may be snDstrmituny to injure, destroy or prevent competition. PUREX CORP. LTD. 117 100 Findings be diffcult to precisely define, certain it is that the latter involves something more than a showing of injury to a competitor. It is in the light of this concept of inj ury that the evidence hcreafter considered will be examined.

c. The commerce question This problem is limited to the alleged discrimination which occurred in the Southcrn (Dallas) Division. Prior to N ovembcr 1946 , the blcach which respondent sold in this area had been shipped from its plant in St. Louis. However, in N ovembcr 1946, it completed a plant in Dallas, and all the bleach sold in the area was thereafter shipped from Dallas. It is the position of respondent that the record fails to establish any sales after that date from the Dallas plant to points outside the State of Texas at prices different from those charged within the state and that, accordingly, there ha.s been no showing of any diserimination "in the course of commerce " as required lmder the Act.

Counsel supporting the complaint argues that respondent's contention- is based on an incorrect version of the facts, and, further, that respondent has erroneously applied the law insofar as the commerce requirement of the Act is concerned. "With respect to the facts, counsel supporting the complaint points out (1) that respondent has admitted engaging in commerce in the Texas area for the ten-year period prior to November 1946, and (2) that even after the latter date, sales from the Dallas plant were made in commerce. Insofar as the first point is concerned, it is suffcient to note that while the shipments from St. Louis to the Dallas area prior to 1946 were undoubtedly made in the course of commerce, the bulk of the evidence with respect to alleged discrimination in price and injury to competition in the Texas area relates to the period after 1946. The second point made by counsel supporting the complaint is based on a misunderstanding of respondent position. Respondent's position is not that there were no sales made from the Dalbs plant to other states, but that there was no showing of any price differences between sales made in Texas and those made in the other states served by the Dallas plant. Counsel cites various exhibits purporting to show that respondent's Southern or Dallas Division included parts of New Mexico, Colorado and Oklahoma, as well as the State of Texas. iVhiJe this may be true, the exl1ibits referred to do not disclose any sa.les in these territories at net prices different from those in Texas, except eluring the month of .Julle 1949. :\Jost of the exhibits merely show that the Dallas Division , 5, 6 and 56). i'lhile twoincluded territories in other states (CXs 4 of the exhibits do reflect actual sales and deals between April 1949 and Findings 51 F. T. C.

October 1040 in the various tel'itories of the Southern Division, they disclose a different deal in only a single tel'itOlY and only for a period of one month. Except for the month of June 1040 when the Oklahoma tel'itory had no deal and the other territories had a deal, thc exhibits refcrcd to by counsel disclosc that the deals in Albuquerque and Oklahoma territories were identical with those in the Texas tehtorics (CX 27 and 55).

l-Iowever, while it may be true, as respondent contends, that the record is lacking in substantial evidence of interstate sales at different prices from the Dallas plant after X ovember 1046 it is thc opinion of the examiner that the commerce requirements of the Act have been satisfied insofar as this area is concerned. \Vhile, admittedly, the Act requires that the discriminator shall be "engaged in Colt- 11181'ce " and that the discrimination shall have occurred "in the course of such commerce, it is not necessary that all sales shall have occurred "in the course of such commerce, but it is suffcient that either or any of the purchases involved in such discrimination are in commerce . Thus it is clear, from the language of the statute, as well as the legislative history, that the Act was intended: .. .. .. to extend its scope to discriminutions between interstate und intrastate customers, as well as between those purely interstate (Senate Report No. 1502 74th Cong., 2nd Sess., 1936, p. 4).

while it may be that the record fails to 8hmy sales in commerce at ovember 1046 (exceptdifferent prices from the Dallas plant after X for the month of June 1040), it does appear that sales and shipments from other plants of respondent were made in commerce after vember 1946, at prices different from those charged in the Dallas area. This, in the opinion of the examiner, is suffcient to satisfy the commerce requirements of the Act. The undersigned does not understand these requirements to be applicable only on a plant basis. In determining whether discrimimttion has occurred in the course of commerce, consideration need not be limited to a single plant of the offending party. If a respondent with it plant in California Inakcs sales in various parts of the country at prices different from t.hose charged in the State of Texas, the fact that the sales from its Texas plant are an made nt the same price does not, in the opinion of the examiner, prevent the price differences bety\cen the hro plants from being considered as discrimination occurring in the course of commerce.

In opposition to this position, respondent relies on the case of .lfyers vs. Shell Oil 00. 06 F. Supp. 670, where the pbintiffs, operators of senTjce stations in the Los Angeles area, brought an action PCREX CORP. LTD. 119 100 Findings for treble damages against the defendant oil company, charging it with having discriminated against them in the prices at which it sold its petroleum products in the iVestel' States area. Plaintiffs failed to show that they were in competition with service stations outside of California. It further appeared that all the gasoline delivered to plaintiffs by the defendant was refined in the State of California. The court held that the transaction bebveen plaintiffs and defendant was wholly intrastate, and that there could be no recovery since "it is essential that the tra,nsllctions of which they complain were made in the course of such commerce . Assuming the correctness of the court's holding there, it is distinguishable from the instant situatioll. As private litigants, it was deemed necessary for plaintiffs there to show that they were damaged by a discrimination which occalled in the course of commerce. The Commission, however, is not in the position of a -.vholesaler-private litigant in the State of Texas which must show that it was damaged by virtue of a sale made at a lower price in commerce. It is in the position of proceeding in the public interest to stop alleged discrimination in price between Texas and areas outside of Texas, \\"which discrimination has aJ1egedly injured respondent's local competitors. Unlike plaintiffs in the i1fye1's case, who were not in competition with favored service stations outside the state, those allegedly injured here (respondent's competitors in Texas) are in competition with respondent, which operates in other states and sells at different prices in those states.' It is therefore concluded that the difference in prices between the Texas tehtories and other areas may be regarded as discrimination occurring in the course of commerce, even though all of the shipments from the Texas plant were made at the same price. D. The mo tion to strike Respondent has moved to strike portions of the testimony seventeen witnesses on the ground that such testimony constitutes inadmissible hearsay evidence. The testimony in question was given by representatives of a number of competing manufacturers of bleach who testified concerning statements made by buyers or other representatives of wholesale grocery customers to the effect that they were going to cease doing business with the particular manufacturer or were going to order less merchandise from him, because they were getting a better deal from Purex. This testimony fell into two See Sun Cosmetic Shoppe v. Eliznbeth Arden Sales Corp. 178 F. 2d 150 (C. A. 2), cited by tJJe conrt in the Myers case, where the fact that the alleged injured plaintiff was in cornpetiton with a retailer In another state was held suffciellt to estabJj h a cause of atnoJ).

Findings 51 F. T. C.

categories. The first consisted of testimony by a representative of the competing manufacturer who, himself, talked to the buyer or other representative of the wholesaler and was personally told why the wholesaler was ceasing to do business with, or was decreasing its orders from, the witness' company. In the second category the witness had not himself talked to the wholesale customer, but testified as to information reported to him by one of his salesmen or brokers, or some other representative of his firm, regarding a conversation which the latter had had with the wholesaler, in which the wholesaler had given his reasons for declining to do business ,with the witness' firm. Respondent, in its main brief, contended that both of these categories of testimony were inadmissible, the first being hearsay, and the second being hearsay upon hearsay. In its reply brief, respondent apparently conccdes that the first category of testimony may be admissible, as an exception to the hearsay rule, to show the state of mind of the declarant (the buyer), but argues that such testimony would be admissible only after other requisite facts had been established by independent reliable, probative and substantial evidence such as the fact that respondent had sold merchandise to the witness company, the price at which 8)1ch merchandise was sold, the extent of any deals offered, and other similar facts. Counsel supporting the complaint contends that all of the testimony in question is admissible under recognized exceptions to the hearsay rule, and that, in any event the Commission is not bound by thc technical rnles of evidence. While it may be that the technical rules of evidence do not apply 9 the Administrative Procedure Act re-in Commission proceedings quires that findings must be based on evidence which is "reliable lO Uncorroborated hearsay, which de-probative, and substantial" prives respondent of the basic right of cross-examination, does not constitute reliable or substantial evidence, and should not be made the basis of any findings in an administrative proceedings Since findings cannot be based on such evidence, it is ordinarily not desirable to admit such evidence into the record, since a claim might later be made that the findings of the examiner or the Commission were based at least in part, on such evidence.

With respect to the first category of testimony objected to, it is the opinion of the examiner that it is ac1missible as an exception PTC vs. Cement Institu- 333 U. S. 683, 706; Phelps-Dodge Refining Corp. vs. FTC 139 F. 2d 393, 397; U. S. vs. United Shoe lrfachinerll Corp., 89 P. SUpp. 349, 35.. 10 Section 7 (c), Administrative Procedure Act. II Consolidated Edison Company vs. N. L. R. E., 305 U. S. 107 , 329;, l'+State EroadcU8ttng Co. , Inc. v. P. C. 96 F. 20 5U7, 5U6. PUREX CORP. LTD. 121 100 Findings to the hearsay rule, to show the state of mind or motive of the buyer in refusing, or as part of the res gestae of the act of refusing, to continue business relations with the witness' firm. While, as respondent cOl'ectIy points out, the facts stated in some of the conversations with the buyers as to what Purex s price was, or what deal Pnrex was offering the buyer s firm, must be established by other independent evidence, to the extent that the statement of the buyer reflects his state of mind or motive in refusing to deal with the witness firm, it is material, and is admissible for that purpose. Such testimony is not, of course, conclusive, and respondent may offer other testimony, either through the buyer, or through other witnesses, t.o contradict such testimony, or to show that there were other reasons for the refusal to deal ''with the witness: firm. Although, as respondent points out in its reply brief, counsel in support of the complaint, despite his disclaimer t.o the contrary (Answering Brief, p. 37), has sought in a number of instances to use the information related to the witness by a customer, testimonially, to establish the prices and deals of respondent, the examiner will not give the testimony in question any weight for that purpose. The examiner s rulings in this regard will appear from the discussions of the evidence concerning injury to competition in a succeeding section of his decision. ,With respect to the second category of testimony, where the witness testified, not as to statmnents made directly to him by a customer, but as to infonnation received from one of his salesmen, or some other third person, concerning statements made by a representative of the cns tomcr to such third person, it is the opinion of the examiner that such testimony is clearly hearsay evidence, and is not within the exception discussed above. Although counsel supporting the complaint has suggested that such testimony may be admissible as being in the nature of reports made to the witness in the regular course of business by salesman or other representatives of his company, the examiner does not regard this testimony as falling within that category. ,Vhile written reports made by salesmen coniemporaneously with the OCCU1' rence of an event, when the motive for falsification is at a minimum might have testimonial value, the testimony of a wit.ness in 1952. a.s to what a. salesman ora.lly reported to him several yem's ago regarding the latter s conversat.jons with third persons does llot fall -within this 1. Lawlo/. vs. Loewe 235 U. S. 522; Hubbaj.a vs. Allyn 200 :M:ass. 166 , 86 . E. 356, 360; Bnmnen vs, Bouley, 272 ::lass. CT, 172 K, E. 104; Carpf,enters Union vs. CitizC11s Com,mittee etc" 333 Ill. 225; 165 N. E. 393, 404; Gn;after New York Li.1:C Pr)!ltry c. of c, vs. u, 47 F. 2d 156, 159, cert, den, 283 "G. S. 837; Ame/.lean coope1'ative Serum A8s v, A/1char Service Co" 153 F. 2d 90T, 912. 122 FEDERAL TRADE COMMISSIOK DECISIONS Findings 51 F.

category." Where the witness himself has talked to the buyer, respondent has the opportlUlity to cross-examine him in order to ascertain to whom he spoke and to otherwise check the correctness of the reported conversation. This safeguard is lacking where the witness is testifying as to information received orally from third persons as a result of alleged conversations with unnamed representatives of a custOlner. 'Vhile the examiner believes that the testimony in the second category is inadmissible, no action wil be taken at this time to strike such testimony. The motion filed by respondent to strike the testimony does not designate the portions of the record to be stricken, except in a general way. In view of the fact that this proceeding is being disposed of by an order of dismissal, the hearing examiner considers it unnecessary to remand the matter to respondent with a request that it designate by page and line the portions which it considers objectionable. Ho\vever, as will appear from the discussion of the evidence in a succeeding portion of this decision no reliance will be placed upon such testimony ill the evaluation of the evidence. IV. Primary line injury.

Counsel supporting the complaint sought to show injury to a number of respondel1es competitors in various midwestern and southern Inar ket.s. Despite its bulk, it is the opinion of the hearing examiner that the record is lacking in reliable, probative and substantial evidence of injury to any of respondents competitors and that, in any event the evidence does not establish a prima facie case of injury to competition with respondent in any of the markets where it operates. In view of the fact that the dismissal of this charge is based largely on the lack of reliability or substantiality of the evidence offered cowlsel supporting the complaint, it is necessary to discuss this evidence somewhat in detail in order to make clear the basis of the examiner s conclusion in this rega-rd. This discussion is necessarily prolonged because of the number of competitors and territories involved. Set forth below is an analysis of the evidence offered as to primary ling injury in each of the territories and ,with respect to each of the competitors as to whom evidence of injury was offered. A. The Twin Cities and Dakota markets (including parts of Iowa and N cbrask.) Counsel in support of the complaint endeavored to show injury to competition with respect to the manufacturers of the following 1. It may be noted that while the testimony of at least one wltneBs indicated that it was based upon written reports made br broker-representatives of his company (R. 1229), no effort was made to produce such written reports at tile hearing. , , , PUREX CORP. LTD. 123 100 Findings bleaches in this territory: "IGeen-ez Save- a.-day IIjIex Lineo Hercules" and "Clorox . Most of the evidence involved alleged injury to competition in the so-called Twin Cities area of :\1inneapolis and St. Paul, but some evidence was offered with respect to alleged injury to some of the companies manufacturing the above bleaches in adjacent areas and states. Respondenes list prices during the period in question varied from iLbout $1.40 on cases of half-gallon size to $1.50 on quart and gallon cases and $1.65 on cases of pint size. Beginning on April 14, 1947, and continuing for most of the period until December 1950, respondent offered a series of deals, mainly in the form of free goods. Two of the deals involved an offer of a case of qnarts free with each three cases of gallons purchased, and another offered a case of quarts free with each two cases of half-gallons purchased. The effect of these deals was to reduce only the price of the gallon and half-gallon sizes. Jlowever, on .July 1, 1948, and con6nuiug until December 16, 1950, respondent offered a deal of one case free with each two cases purchased, irrespective of size, thereby resulting in an across-the- board reduction of 331h % for aU sizes. The evidence offered to show injury to the manufacturers of each of the abon brands of bleach by these deals is discussed below;y. 1. "Kleen- " bleach This product was manufactured by Continental Laboratories Minneapolis, Minnesota, which operated from about 1934 until it went into bankruptcy in 1952." The company was originally a partnership consisting of Louis Shapiro and Joseph Goldman until 1938, at which time the latter left the business. Shapiro continued on as sole proprietor. The operation was a relatively small one, employing about four men in the manufacturing of bleach, and Shapiro himself did most of the selling. For the most part the company sold directly to the retail stores, but had a few jobber accounts, Its sales averaged from 45 000 to 50 000 cases a year which, on the basis of an a,yerage seiling price of about $1.20 per cftse, would amount to less than $60 000. 00 in gross sales per year. The company s plallt and ma.in mal'ket was in the Twin Cities area which, it was testified, accounted for about 65% of its sales. It also alleged to have had a number or accounts in and around Omaha, Nebraska, until about 1937-193f1 , HJhl in the Sioux City, Iowa, and Sioux Falls, South Dakota areas until about 1945-1946. From 1946 until the company s bankruptcy in 190',2 14 Although tile time of this company s cessation of operatiuns was at anf' point in t1JC testimony fixed as 1951 (R. 1385), it wa subsequently staterj to he 1052 (H. 165C, 1643) Findings 51 its sales were confined primarily to the Twin Cities area and the vicinity of Fargo, North Dakota.

Counsel supporting the complaint endeavored to show that Kleen-ez retirement from the above ma.rkets and its eventual bankruptcy were due to Purex s competition and, more particularly, to the various deals which Purex allegedly offered and which Kleen-ez could not meet. Counsel relies prl1larily on the testimony of the witness Shapiro, and to a minor extent on that of his partner, Goldman. This testimony is analyzed below in relation to each of the areas where it claimed that Continental Laboratories was injured as a result Purex s competition:

a. Omaha, LV ebraska Shapiro testified to having been pushed out of the Omaha market by Purex at dates which he fixed variously as 1939 (R 1306), 1937 (R 1655) and "37 or the first part of '38" (R. l(j58). Iu his direct examination he claimed that his company had about "fifty or sixty retail accounts in Omaha" which it lost (R.. 1398), but on cross-examination he increased the number of accounts lost to "about seventy-five to a hundred retail stores" (R. 1657). iVhile testifying on direct examination that he did business with 1'etaile1' in Omaha and "didn t have any jobber accounts" (R. 1398), Shapiro testified on cross-examination that he didn t do any lJUsiness Lwith retailersJ in Nebraska " but sold to a jobber in Sioux Fails (Kaplan iVholesale Grocery), which, in turn, did business in Nebraska (R. 1634). AIthongh counsel supporting the complaint claims that Shapiro s volume of sales in the Omaha market aI1egedly lost because of Purex, was 10 000 to 12 000 cases pci' year reference to Shapiro s testimony reveals that he gave this as a figure of what he "might have lost" and that he finally conceded he "really (didn tJ remember how many cases ,ve sold in the area, because I haven t any records" (R.1658).

A comparison of Shapiro s and Goldman s testimony reveals a. di vcrgenee of opinion as to the area in which Purex competition affected them during the period in question and further raises serious doubt as to whether it did have any material effect on them. Thus, while Shapiro testified that the diffcnIty with Purex was restricted to the Omaha area since Pllrex ,vas "pretty fair competition" in the Sioux City market during the 1937 period and that they "never had no bad deals there CSioux City)" (R. 14(1), Goldman claimed that the area of injury included not only Omaha but also the Sioux City market (R. 1432). However, despite Shapiro s c.aim of injury in the Omaha market and Goldman s claim that they were also driven out of Iowa Goldman admitted on cross-examination that his leaving the partner- , PUREX CORP. LTD. 125 100 Findings ship in 1938 was due to an accident in which he had been involved, and that the "business was a profitable business and (his leavingJ was not because the business was going down or losing money" (R. 1448). Aside from the confusion and contradiction r!JVealed by the above testimony as t.o where and to what extent Pm"ex was causing injury to Kleen-e" the fatal weakness in the evidence offered with respect to injury competition in the Omaha market is the complete absence of reliable evidence.e as to \vhat deals, if any, Purex had in this area during 1937-1939. The earliest reliable evidence in the record of any Purcx deal in this area is a deal which went into effect from April, 1947 almost ten years after the time Shapiro claimed Pm'ex had forced him out of the Omaha market (CX 7). Counsel supporting the complaint refers in his brief to testimony by Shapiro and Goldman as to what various customers told them with respect to Purex s prices and deals in this area,1 I-lowever, such testimony is purely hearsay, insofar as establishing the fact of what Purex s prices and deals were at that time and no reliance can be placed upon such testimony for that purpose. Lacking reliable evidence of discrimination in the Omaha market during the 1937-1939 period it bccomes supcrfluous to consider the testimony of al1cged injury, although such testimony is not without significance in reflecting on t.he weight. which should be given to the testimony of the \witness Shapiro.

b. giouer Falls, Smtth Daleota, and Sioner Oity, Iowa Shapiro testified to his being forced to quit the Sioux Facts, South Dakota, and Sioux City, Iowa, territories during 1945 or early 1946, so that by 1946 he had lost about 80% of his territory outside of the Twin Cities area, which loss he attributed to the fact that he "couldn t sell merchandise on account of Pm' " (R. 1392 1402). Although Shapiro named a number of accounts whose loss counsel seeks to attribute to Purex, Shapiro s testimony reveals that in some instances he didn know whom he lost these accounts to and that in others the loss was due to the competition of Hilex and Clorox bleach as well as Purex (R. 1645, 1402). Thus, in the case of his main account in Sioux City (Kaplan iVholesale Grocery), he conceded that he didn t know whom he lost the account to I just lost him " (R. 1645). I-Iowever, irrespective of whom Shapiro lost these accounts to or whose competition was responsible for his losing them, the evidence oi!'ered with respect to the Sioux Falls and Sioux City areas is subject to the same fatal infirmity as that pertaining to the Omaha territory, 1. Shapiro testified that a grocer in Omaha had reported Purex s price to him as 80 rentsper cabe (R. 1397), while Goldman claimed that customers informed him the price was 90 -cents per ('ase (R. 1431).

Findings 51 F, T. C.

viz., there is no reliable evidence in the record as to what deals, if any, Pnrex had in these areas during the 1945-1946 period. The earliest reliable evidence in the record of any deals in the Sioux City area is a deal of one free case. with three from April 8, 1947, to April 15, 1947 (CX 7). This could not have had any effect on Kleen.ez' departnre from this area, since, according to Shapiro, he lost the Sioux City area in "'45 or maybe ' , early '46" (R. 1402). Similarly, in the Sionx Falls territory, the earliest reliable evidence of any Purex deals is a deal involving one froo case of quarts with three cases of gallons purchased, which was in effect from April 14, 1947, to August 15, 1947 in the Minneapolis territory, with which the South Dakota tel'itory was merged in 1946. :However, Shapiro had quit this "market entirely in 1945, between '45 and '46" (R. 1392). Other than some hearsay testi. mony by Shapiro that a customer in the Sioux Falls area told him that Purez was giving him a "terrific deal" and that the customer Wfi3 reselling the bleach at 29 cents per gallon, there is no other evidence of Purex s prices and deals during the 194i5- 1946 period. c. The l'1.uin Oities area The remainder of Shapiro s testimony related primarily to the T'Iin Cities area, to which his business was 11ninly confined from 19,16 until 1952. In this area he claimed that he sustained a deficit of $4 000 to 000 ft year far four 'Or five years, until he finally went into bank ruptey in 1952 (R. 1391 1655). His testimony 'with regard to this area was characterized by the same cantradictian and confusian as that involving the Omaha, Sioux City and Siaux Fails territories. DurN ing his direct examination he named a nmnber 'Of accaunts which n.llegally C1.d (hhn O'tt altogether in the T,vin Cities area due ta Parex s competition, and testified, in addition, that he had "to weaken my price" in order to retain other accounts in the market (R. 1414). On crass-examinatian, he testified I didn t say 1 lost any C'1lst07ners- I said all I had to do was to weaken the p,'ice in order to meet Pm' competitioll; that is where I broke my neck" (R.1671). However, at still another point in his cross-examination, he claimed that he maintained (hisJ price but granted an advertising allowance in 'Order to meet competition (R. 1638). ' While claiming that his price was nevel' Jower than $1.10 to $1.20 a ease between 1946 and 1952 (R. 1643) and that he had never sold any " dollar stnff" (R. 1638) his testimony "e. veals that in 1946 he sold to Kaplan 'Wholesale Grocery and to Grocers Warehouse for 'On dollar to a dollar ten " (R. 1647) , that he also sold another brand 'Of blea.ch under the na.me " Brightex " ta various accounts in the Twin Cities area at from 80 to $1.00 a case (R. 1653), and said some "::ecandhand merchandise" to 'One jabber for between Pt'REX CORP. LTD. 127 JOO Findings 801 to 90" (E. 1655). After insisting that he had maintained a single price poEcy, Shapiro tially conceded that he, along with all the others in the market, did a EttIe "price chiseling" (E. 1672). Shapiro s testimony with respect to having lost accounts in the Twin Cities area is in direct contradiction to the testimony and evidence adduced through other witnesses. Thus, he testified that he was cut out altogether "by Applebaum s in St. Paul (whichJ was a tel'ific outlet" (R. 1414), whereas the testimony of an offcial of Applebaum who 'vas also called as a witness by counsel supporting the complaint reveals that they didn t start to buy from Purex until 1950 or 1951 (at which time the price was 81.32 per case plus a 2% fee to the jobber), and that they didn t drop any other product at the time they took on Purex (R. 1897). At one point in his testimony Shapiro claimed tlmt he lost the wholesale account of Hancock-Nelson in 1947 because of Purex (R. 1670), while at another point he stated that he had only sold to that account in 1945, some "second-hand merchandise" (R. 1654), this bch1g prior to the time of any trouble with Purex. An examination of the figures supplied by Hancock-Nelson re.veal no purchases of Klecn-ez between 1947 and 1951 (CX love-E). Another account whose loss Shapiro attributed to Purex was one of the largest wholesalers in Minneapolis hy Brothers (R. 1670). Yet the figures supplied by the huyer for th lt account revealed no purchases whatsoever of Kleen-ez during this period (CX 106A & B). The fact that Shapiro s company went into bankruptcy in 1952 is indicative of the fact that it was involved in some financial trouble. l-Iowever, it cannot be determined, on the basis of the evidence in this ecord that the deals offered by Pllrex were a material factor in its demise. Shapiro produced no books or records showing what customers he had, what his prices were, the extent and trend of his sales and the various items of profit and loss in his business operations \which could serve as the basis for a reasoned judgment as to the cause of his financial diffculties. While he sought to attribute to Purex the major responsibility for his diffculty, the nature m1cl quality of his testimony and his demeanor as a witness were such as to engender a complete lack of confidence in his reliability as a witness. 1-lis glibness concerning events going back as much as 15 years involved him in numerous contradictions and inconsistencies. ::Uuch of his testimony ,vas 'based on hearsay and SU11111se. In the absence of corroborating documentary evidence or other reliable testimony, the examiner can place no reliance on his unsubstantiated claims of injury by Purex. It is also not amiss to note, in evalnating Shapiro s testimony, that he \vas not a disinte.rested witness, having purchasel1 423783--58--- ___ _ __ ___ 128 FEDERAL TRADE COM ISSION DECISIONS Findings 51F.

from his trustee in bankruptcy a e-cause of action against the respondent for violation of the Antitrust Laws.

2. Sav-a-day bleach This bleach was manufactured and distributed in the Minneapolis area by the Barton Chemical Company until 1951, when that company ceased operating and leased its business to Christman Chemical Company. Although the full extent of Barton s operations do not appear from the record, it apparently had its head offce in Chicago and also operated a plant in 1:emphis, Tennessee. Its Twin Cities operation appears to have inc.udec1 the states of :Minnesota orth Dakota, and part of 'Visconsin. Its plant \vas located in St. Paul, where it employed three employees in the manufacture of its bleach, a plant manager, and an oIliee girl.

The case of injury to Barton is ba,secllargely on the testimony of two former Barton plant managers, on a former Purex salesman, and on Barton s successor, Christman. Although the head of the Barton Company was present in l\finneapolis during at least part of the hearing and conferred with some of the witnesses: he was not himself called to testify.

One of the witnesses upon whom counsel relies is Arthur Cunnien who was plant manager for Barton from 1945 to 1948. Cunnien testified that during the spring of 1947 business became so qniet that it was necessary to shut down the plant completely for a few weeks and to operate on a part-time basis for a period thereafter (R. 1831). He testified to having called on a number of retail customers of the jobbers to whom he sold and finding them stocked with Purex, which they allegedly told him they had bought as a result of a Purex deal (R. 1832). CUllnien s testimony with respect to this decline in the Spring of 1947 was apparently based solely on his recollection, and no records of Barton were produced to substantiate his claim. His testimony is in conflict with the records of Barton s wholesale customer, Hancock- Nelson, whose pl1chases of bleach Cunnien testified dropped from 75 or 100 cases a weck down to 15 or 20 cases. These records disclose very substantial pl1chases of Sav- day during April and May of 1947, as compared with considerably smaller purchases in January, February and Jiarch. The records of another of Barton s wholesale customers, May Brothers, do reflect some decline in the purchases 10 The figures of case sales for this period were as follow (CX 107-E) : January ----- 130 May_ February- ------_n June --___ ------- 0 50 50 July- 5!JO flIarch__ ----------- August --- -- 1 r 200 Arlril- -----u-- 500 ___ _ _ PUREX CORP. LTD. 129 100 Findings of Sav-a-day during March, April.and May of 1947." However, the record fails to disclose any evidence from which it may be infcrred that Purex was responsible for this decline. :May Brothers' records disclose that while it purchased 200 cases of Purex in May of 1947 , it made no further purchases of that product until October 1947. The alleged decline of Sav- day sales during the Spring of 1947 would appear, therefore, to have no connection with Purex, at least insofar as the ::Iay Brothers account is concerned. It may be noted, in this connection, that Purex s first deal in this area which was one free case of quarts with each three cases of gallons purchased, went into effect on April 14, 1947, while May Brothers' purchases of Sav-a- day had already begun to drop shfLrply in February and1farch. It may also be noted that the Purex deal resulted in a net price of $1.13 per case for the gallon size, with the price of the other sizes remaining $1.50 while Sav-a-day s prices (according to 1fay Brothers' records) were per case for the quart size and $1.05 per case for the gallon size thus making its prices lower thanPurex, despite the latter s deal. Cunnien further testified that after the decline in the Spring of 1947, business improved for a while in the Fall of 1947, and then began to decline again until he left Barton s employ on May 1, 1948. He referred particularly to a rapid dropping off of sales in the North Dakota area, and to a decline of sales to the Hancock-Kelson account in finnea polis. The basis or his claim that Purex was responsible ror the North Dakota decline was information given to him by salesmen of his jobber customers that competition from Purex was "tough" (R. 1833). No reliance can be placed on this hearsay testimony. Cunnien s claim that Purex was responsible for the decline in his company s sales to the Hancock- elson account in :Minneapolis was based on the fact that his broker, who sold to Hancock-Xelson, had informed him that the latter had suddenly started buying large quantities of Pnrex (R. 1837). Aside from the fact that this is unreliable hearsay, reference to Hancock-Kelson s figures discloses that the latter s purchases of Sav-a-day far exceeded those of Purex during 1947 and 1948, and that it was not until 1949 , after Cunni en s connection with Barton had ceased, that there was any marked increase in Hancoc1\- Nelson s purchases of Purex. Furthermore, I-Iancock-Nelson s fig- J7 The figures of case sales for the first half of 1947 are as follows (CX 106) : January ----------- May_____-------------------- 860 June --- 120 February--------_-----n_---- 98 March______ -------------- 21 July ______n ------------ - -- 214 Aprll----_ --n 18 The figures at case purchases from the two companies by Hancock"Xelsoil during the two-year period about which CunnleD testified were as follows (CX 107-A, -E) : Purerx Sav- day 1947______--- -- 3. 058 1 Y48___ 340 231 813 3, _____ _. .

Findings 51 F. T. C.

ures show that up to the time Cunnien left the Barton Company on May 1 , 1948, Hancock- elson had purchased from Barton, during the first four months of the year, approximately three times more than during the comparable period in 1947. It seems apparent that Cunnien s claim of injury to Barton by Pnrex must have been based upon events which occured after he left the company s employ and which had been reported to him by others.

The main witness upon \whom counsel relies in support of his claim of injury to Barton is A. Frank Norton, who was employed as Barton plant manager during 1949 and 1950, and has been employed in a imilar capacity by Barton s successor, the Christman Chemical Company, since October 1952. N ortou s testimony was to the effect that as the result of Purex competition, Barton lost 900/0 of its business in the North Dakota market ( being practically pushed out ofthe area) and also suffered a 30% loss of business in the :\linncapolis aie.. N orton submitted the names of a number of accounts in the orth Dakota tel'itory which he claimed were lost because of Pnrex competition. However, very little, if any, reliance can be based on this testimony with respect to the North Dakota area, since it appears that orton had no personal knowledge of why these accounts were lost. The basis of his testimony that Purex was responsible for the loss of these accounts was letters from Barton s brokers in )J orth Dakota which he had apparently seen but which were not produced during the hearing (R. 1227-1229), and "mainly from MI'. Barton who made peI'iodic visits to North Dakota and talked directly to the brokers and he related the information to me" (R. 1264). Such third-hand hearsay as to what MI'. Barton had told the witness regarding conversations with his brokers, who in turn had related to :Mr. Barton what unknown persons (possibly customers) had related to them and unprocluced letters from brokers reporting conversation with third persons, is hardly a reliable basis for a finding that Purex took 90% of Barton s business in North Dakota. It may also be noted that some of the accounts that Norton listed as having ceased buying from Barton on account of Purex \"e1'8 accounts that had been Jost prior to his own employment by the Barton Company in 1949, and consequently the reason for their loss could not possibly be within Norton s personal knowledge.

19 Among' the accounts lost prior to 1949 are the fonowing: Dickinson Grocery - - 1947 Gamble Robinson, Jamestown--_ 1947 Gamble Robinson, Aberdeen__ ------ 1946 Gamble Robinson, I"argou_u----- u_----- -- 1848 Gamble Robinson, Grand Forks-- -- 1948 (CX 81 , R. 1237-1240).

PUREX CORP. LTD. 131 100 Findings ivith respect to the 30% alleged loss of business in the Minneapolis area, the ,vitness professed to have a more personal basis for his claim that PUlex was responsible for the decline. Despite his testimony that most of his tjme was devoted to production, and the suggestion in his testimony that his contact with customers was mainly through the brokers who sold Baron s bleach (R. 1281) , Norton, nevertheless claimed that in the :Minneapolis area he was in personal contact with some of thc customers there, and that they advised him that Purex competition was responsible for their dropping of his bleach (R. 1231). The only two accounts with which he claimed to have been in contact were May Brothers and Hancock-Nelson. According to Norton, the I-Iancock-Nelson account was lost in December 1949, and he was told by Mr. Gerlich, the buyer for that account, that the reason for this was that Pl1ex had offered them a better deal (R. 1231, 1233 1234). Although it is not particularly important whether Gerlich did or did not advise orton what the Purex deal actually was (since there is documentary evidence in the record with respect to Pllrex s deals during this period, and orton s testimony with regard to the nature of the deal would be pure hearsay anyway), counsel in support of the complaint persisted in endeavoring to get the witness to testify with respect to the deal, and the following colloquy gives an interesting insight into the quality of this witness' testimony: A. He (Gerlich J told me that Pm' ex Company offered a more consistent better deal in the form of price than we could.

By Mr. FORKNER:

Q. Did be mention what that deal or that price was? A. He didn t mention what the price wa- , he just mentioned they could offer fI, better deal or price.

Q. You knew what that deal was? A. Yes.

Q. What was that deal? A. It 1WS one free ' u,;Uh two.

::-11'. VON KALHWWSKI: I move to strike that on the grounds of hearsay. Trial Examiner LEWIS: Motion granted.

:\11'. FORKNER: WeJI, it is in the evidence. Trial gxaminer LEWIS: How did you know it was one free with two? The Witness: From past records.

Trial Examiner LEWIS: What records? The \Vitness: The court rccords, tor one. 1\1'. VON ICU, INOWSKI: Court records? Trial Examiner LE"VIS: What court records? The Witness: The 1'ecords that Mr. Forkner has. By :\11'. FORK El1.:

Q. You knew at the time it was a low price, didn t you? Findings 51 F. T. C. Trial E.examiner LEWIS: It is not a question of whether he knew. \Ve arejust trying to find out how he knew it was one free with two. The Witness: I knew the deal was one free with two. Trial Examiner LEWIS: How did you know? 'l' he Witness: That I knew, the deal was one free with two. Trial ExarnnerLEwls: He told you that? The .Witness: Yes, sir.

Trial Examiner LEWIS: Mr. Gerlich? The Witness: Yes, sir LitaJics supplied) (R. 1234-1235). Thus we find the witness stating in rapid succession that he was not told by Gerlich what the Purex deal was, that he did know from other sources what the deal was, that one of the other sources was "court records, that his idea of "court records ' was something shown him before the hearing by counsel supporting the complaint, and fhmlJy when there was some question as to the reliability of his other sources the witness completely reversed himself and stated Gerlich did tell him what the Purex deal was.

Although Norton claimed" that the Hancock-Nelson account was lost in Decem.be,. 19J,, that allegedly being the date of the last order from that firm and presumably being the time he talked to Gerlich (R. 1231, 1233), the records of Hancock-Nelson which were introdllced in evidence by counsel supporting the complaint disclose that t.he last purchase 01 Sav-a- day bleach was in September 19.J, (CX: 107-E), which antedates the time of Norton s employment by Barton. Gerlich, who was 0.150 called as a wit.ness by counsel supporting the complaint, had no knowledge of any conversa6on with K orton regarding the dropping of Sav-a.-da.y because of any better Purex deal (R. 1060). According to Gerlich's testimony, the reason for the discontinuance of Sav-a-clny in September 1948 Wae: that it was not selling (R. 1046, 1047, 1060). Gerlich testified that the wholesale price of Purex was higher than Sav- day until Angust 1048 (R. 1048). The record does not reflect what the relative retail prices of Purex and Sav-a- dR-y were in 1948 in the stores which purchased from Han cock-Nelson. 0 However, it does not seem reasonable to assume that a Pu.rex price advantage, if any, at the retail level for a period of approximately one month (between Angust and September 1048) was responsible for the fact that Sav-a.-day was not selling in the retail stores and that this was the re-ason IIancock - Nelson tlroppec1 the produet. On the contrary, the record discloses that, despite the difference in the wh01resale price between the two bleaches, Hancock-Nelson placed a large order for 546 cases of Sav- day bleach in September Tlle only- Eancock-Xelson price list of suggested retail prices, offered in evidence by counsel supporting the complaint, was one for the week of April 21 , 1952 (CX IDS). PUREX CORP. LTD. 133 100 Findings 1948, and that the total purchases of Sav-a-day for the year up until the, time of its discontinua,nce were 3 231 cases (exceeding the purchases of Sav-a-day for entire year 1947), as compared with Purex purchases totaling 813 cases for the year 1948. Furthernlore, Hancock-Nelson s records show that the dropping of Sav-a-day did not result in any marked increase in the purchase of Purex bleach during the balance of 1948 and that it was not until the Spring of 1949 that Hancock-Nelson began to buy Purex, in anything approaching substantia.l quantities. There ,vould thus appear to be no cOlmection between the dropping of Sav-a-day and any deals of Purex. In the case of :\1ay Brothers, the other wholesale account which Norton claimed was lost due to Purex competition, he was unable to identify thc buyer from this concern who was alleged to have to1c him that his account was being dropped because of Purex, and there is no way to verify his testimony. The May Brothers account was lost in May 1950, the date of the last purchase of Sav- day being in April 1950 (R. 1232). The May Brothers' buyer who testified in this proceeding gave as the reason for the discontinuance of Sav- a.-day the fact that the sales of the product were too small to justify handling it (R. 1928). "Whether this was due to any price advantage ,which Purex had as a. result of its deals is something which cannot be determined from the record. It is significant that in J anuary 1950 the price of Purex to fay Brothers, as a result of its deal of one free case with two, was $1.13 fol quarts and $1.07 for gallons, while the price of Sav-a-day was $1.10 a case for both sizes (CX 106-B). This hardly gave Purex any cOlnpetitive advantage pricewise. However, in April 1950, the price of Sav-a-day was increased to $1.2-1 a case for both sizes, thus making it more expensive than IJurex. Since 1fay Brothers discontinued Sav- a.-day in lay 1950, it is just as reasonable to assume that this price increase was a factor in the decision to drop Sav-a.-da,y as it is to aSSlUl18 that Purex s price affected this action. It 111ay be noted, in this connection, that while Purex s best deal of one free case with two began in .J uly 1948, it had no marked effect on the purchases of Purex by :YIay Brothers. It was not until .liarch 1949, some ejght months later, that there was any marked increase in the purchase of Purcx bleach by :\1ay I3rothers. On the other hand, its purchases of Sav-a-day bleach had already begun to decline in :\lay of 1948 before the Pure" 1-2 deal went into efrect. 2: Hancock-Nelson purchases of Purex for the balance of 1945 TIerc: September___--__-- ------ 51 cases XovQinber -- 51 cases October ------------ - 192 cases December - one 51 F. T. Findings There thus appears to be no correlation between the increase in the purchases of one bleach and the decline in the purchases of the other. In view of the unreliability of K orton s testimony and its failure to square with the testimony and documentary evidence adduced through other witnesses called in support of the complaint, no finding of injury can be based thereon, particularly in the absence of corroborating evidence from Bartoll S own books and records. The ab- SCllce of such records rcnders it impos::ible to determine what accounts Barton sold to, the extent of his sales to them, the exact period when such sales ceased or began t.o decline, and the various items of profit and loss which affected his business. Thus, Norton testified that about 40% of Barton s capacity \rab elevoted to private-label bleach (R. 1278), some of it selling for as low as S1.00 a case (R. J 2G9). It is possible that losses on thi part of his operations rather than on Sav-a.-day bleach were responsible for Barton s difficulties. This is something ""which could be cleared up only by an examination of Barton s books of account. The record also suggests that other factors may also have had a bearing on Barton s difficulties. Thus a represenbtive of the National Tea Company testified that his company dropped Sav-a-day in 194G (before any Purex deals) due to Barton s inability to supply them with all sizes, the slowness of deliveries, and because he had heard the company was giving competitors better deals (R. 19GG, 1979).

Counsel in support of the complaint sought to bolster KOlton testimony by that of Ray Olson, who had worked for Pllex as a salesman for about a year beginning September 1947, and later left Purex to work forBarton until 1949. Although Olson claimed that when he ,vent to work for Darton he had diiIculty selling its product due to Purcx s deals, his testimony reveals that I-lilex ",- as also offering deals at that time, and that this too "as a factor in the sales resistance "which he met (R. 19(7). Olson conceded that Hilex was the dominant factor in the :Minneapolis market and that even when he was with Purex he found competition "pretty rough" because of Hilex (R. 190G). Despite his claim that he was unable to sell Sav-a-day because of Purex, Olson was unable to name a single store where he had met such sales resisbnce and conceded that he had pretty much forgotten what had happened during this period (R. 1915). After testifying that he had left Purex for " personal reasons " (R. 1906), he admitted on cross-examination that it was because he didn t get along with the broker and felt animosity toward him although he denied t.hat this animosity extendcd t.o the Purex Company itself (R. 1911). Olson impressed the examiner as a disgruntled employee seeking to PUREX CORP. LTD. 135 100 Findings vent his spleen on his former employer. In any event, his vague testimony is such that it has very little value. In addition to former Barton employees, counsel in support of the complaint called as a witness Richard J. Christman Barton s successor. Christman, operating under the name Christman Chemical Company, leased Barion s facilities and building, begin1l1ing January 1 , 1951, and continued manufacturing Sav- a.-day bleach. Christman s testimony reveals that when he entered the market in .J anuary ID51 , he found it "was dominated by a well knmvn, well advertised bleach, namely Hilex" (R. 1348), and that I-ilex is "synonymous with bleach, in this area" (R. 1368). In the lower price range, he testified his own bleach competed with Purex, Hylo and Kleen-cz bleaches, and, of the three he claimed Purex had the greatest public acceptance. 1Vhile claiming that this was due to Purex s price, based "principally" on what he had been told by his broker, and also from information obtained from salesmen and as a result of contacts with customers (R. 1351), Christman admitted tlmt advertising was also a. factor in public ac ceptance (R. 1354), Ilis testimony reveals that while his compctitors engaged in va.rious types of advertising and promotional work he has not done so (R. 1352). 110\';ever, according to his own testimany, his price is actually 4 lower than Pnrex, and the records produced by him reveal that his business has increa,sed since he took over from Barton, both in dollar volume and in the number of cases sold (R.1364, CX 83).

Despite the fact that it appears that Barton Chemical Company ceased operating and le,ascd its business to Christman, the record, as a whole, fails to justify a finding that Purex competition resulting from the deals which it offered in this area was responsible for the alleged decline of Barton s fortunes. The confused, contradictory and unreliable testimony of witnesses ,rho gave piece-meal accounts the ab-as to what occurred during the period in question, 1947-1950; sence of Barton, who admittedly determined his companies sales all fa-policy (R. 1852), and would presumably have a better overmi1iar1ty \with the events that occurred during this period; and the lack of corroborative documentary evidence from Barton s books and records render it impossible to arrive at any definite conclusion wit.h respect to the reasons for his cornpanis r.llegeclloss of business. 3. Ililex bleach This bJeach is manufactured by the Ililcx Company, which operates plant.s in the Twin Cities area and in Denver, and, prior to 1950, also operated a plant in Danes, Texas. Its main plant in the Findings 51 F. T. C.

Twin Cities area employs 150-200 people. The record discloses that despite the fact that Hilex is the highest-priced bleach in the Minneapolis area, it is the dominant figure in the market and its sales exceed those of a1l other bleaches combined, including Purex (R. 1105 1049 1599) .

In support of his claim tJUtt HiJex was injured by Purex s deals counsel cites the testimony of Hilex s broker, John Grace, who complained that Purex was "stifling" IIilex in obtaining a greater volume of business than it now has (R. 1104). Grace conceded, however that despite Pure.x s competition, Hilex s sales had increased "a fair amount" from 1946 to 1952 (R. 1142), and that he knew of no customers lost to Purex (R. 1116). Counsel in support of the complaint also refers to the testimony of Lowell Tesch, a Hilcx assistant sales manager, who complained about a loss of sales during 1949 in the Omaha area, in the Denver territory, and in the vicinity of tumwa, Iowa, all allegedly due to Purex deals which were reported to him by customers. Despite these troubles, Tesch conceded that there had been an over-all increase in HiJex s business, that Pl1rex deals had had no effect in the Minneapolis area where Hilex is kingpin, and that sales from the D81lYer plant had increased substantially (R. 1820-1822).

The president of the Hilex Company, A. A. Eldrcdge, while testifying that competition had been keen in the Minneapolis area, resulting in more sales work, advertising, and some deals on the part of his own company, was unwilling to attribute this to anyone competitor and testified that Pllrex was no more of a competitor than any other company in the area (R. 1583-1586). He agreed that Hilex was predominant in the Twin Cities territory; in fact that. it. was "sitting on top of the world" in that market (R. 1604) and, further, that sales from both the Twin Cities and Denver plants had increased substantially since 1946 (R. 1615).

The evidence offered with respect to the Hilex Company is such that it affords no substantial or reliable basis for any fil1ding or inference that Purex competition had any material adverse effect on t.he fortunes of the Hilex Company in any of the above mic1wcst areas. 4. Linco bleach This bleach is manufactured by Linco Products Corporation and is distributed by Lineo Products Company, a partnership, both companies being located in Chicago, Illinois. Salvatore Giachetti, president of the manufacturing company and a partner in the distributing company, testified at the hearing with respect to alleged injury to _____ PUREX CORP. LTD. 137 100 Findings competition caused by Purex bleach in two of his company s tel'itories the Twin Cities market (consisting of l\Iinneapolis, St. Paul and the surrounding areas) and the so-called Tri- Cities tel'itory (consisting of Davenport, Iowa, and foline and Rock Island, Illinois). The testimony and evidence with respect to injury to competition in each of these areas are discussed separately below. R. The Twin Cities area According to Giachetti' s t.testimony, Lined entered the Twin Cities market in 194G and remained there until about October 1940, \\'hen it withdrew, allegedly because of Purex competition. Giachetti testified that his main competition in the Twin Cities market came from Tlile.x and Clorox until Purcx inaugurated its deal of one free case with two in ,July 1948 (R 2185), which resulted in a decline in Linco sales and the eventual decision to withdraw from the Twin Cities market in October 1949, after the loss of Linea s main customer, National Tea Company (R. 2283).

Counsel supporting the complaint endeavored to show, through summaries prepared from Linea s books and records, that its annual sales during the period of its operation in the Twin Cities market were as follows:

1946_____- - - --- --- ----- - 11 , 900 cases; 1847 -- ---------- 11 200 cases; 1848_ ---- 24 200 cases; 1949_-- ----- 11 000 cases (up to October). The exhibit containing the figures for the years 1948 and 1949 (CX 113-C) vms stricken from the record, when itbecHmc apparent that the invoices and other basic data upon which the specially-prepared summaries were based were not in the hearing room, available for inspection by cOlUlsel for respondent, and when an examination of t.he summaries for preceding years for which data were available disclosed a number of inaccuracies (R. 2255, 2257, 2268-2270). Although the attorney in support of the complaint stated that he would seek to have the basic records available at a subsequent hearing and reoffer these exhibits, he failed to do so. He has, nevertheless, relied on these figures, which were referred to in the testimony of Giachetti, despite the fact that it was clear from the latter s testimony that his statements regarding the totals for 1948 and 1948 were based upon the stricken exhibit, and that he had no independent knowledge of these figures (R. 2279, 2187). In the absence of reliable evidence with respect to the sales of Linco in the 1948-1949 period, when it was claimed that Purex competition affected Linco and finally drove it out of the 138 FEDERAL TRADE COM:vrSSION DECISIONS Findings 51 F. T. C.

market, the record affords no adequate basis for arriving at any definite conclusions with respect to this situation. However, even assuming that the information contained in the stricken exhibit is properly before thc examiner, the record fails to sustain Giachetti's claim of injury due to Pm' ex. Although Giachetti otijied that he began to feel the effect of Purex competition after the latter instituted its 1-2 deal in July 1948, his company's figures for the year 1948 do not bear him out since the total sales of 24 700 cases in that year arc more than double that of the previous year, when, according to Giachetti, Purex was riot gi"ling him any trouble (R. 2185). Giachetti sought to explain this substantial increase in sales during 1948 on the ground that his own company had instituted a coupon deal in the Spring of 1M8 which resnlted in a retail price reduction of 20 cents per gallon (R. 2201, 2184). However, if, as Giachetti claimed this coupon deal was responsible for the marked increase in sales of Linco during 1948, it is equally reasonable to assume that the discontinuance of this deal in 1949 was responsible for the decline in Lineo sales to 11 000 cases, rather than to attribute this de.cillc to Purex competition. It is significant that his sales for the ten-month period during which he operated in 1949 are substantially the same as his sales for each of the full years 1946 and 1947 when, according to Giachetti, he was having no diffculty with Purex. Giachetti gave as his main reason for leaving the Twin Cities market, the loss of his largest account, National Tea Company, which loss he "assumed" was due to PUTex (R. 2189, 2283). This assumption was based mainly on hearsay information received from his sales manager, who had allegedly contacted the National Tea buyer (R. 2190). He also claimed that he himself had talked to seyeralretail store managers, who purchased from National Tea, and that they had told him that they were adding a new bleach to their shelves called Purex. Since the exhibit covering Linco s sales during 1948 and 1949 was stricken from the record, it is not possible to determine therefrom what the trend of Lineo sales to Nationa.1 Tea Company was during this period. I-Iowever, reference to National Tea Company's own figures raises considerable doubt as to the accuracy of Giachetti' s claims. Tn the first place, although Giachetti testified that he began to feel the effect of Purex competition with the institution of its 1-2 deal in July 1948, the figures of National Tea Company disclose that they did not make their first purchase from Purex mltil December 21 1948 (CX 109-C). Tn the second place, Kational Tea records covering blcach purchases from 1947 to date, and containing figures for Hylo, Hilex, Purex and Lineo bleaches disclose purchases ___ PUREX CORP. LTD. 139 100 Findings of Linco only in 1947. In the absence of an explanation to the contrary, it must be assumed that these figures are complete. It would thus appear that the National Tea account was lost prior to the time when that company started its purchases of Purex bleach. In considering the reasons for Linco s departure from the Twin Cities' market, it may be noted that one of its competitors attributed it to the fact that Linco s freight costs from Chicago were too high to enable it to compete (R. 1320). Others complained about their own diffculties ili meeting Lineo s competition at various times (R. 1200, 1408). The record also indicates that Linco had its own deals in the Twin Cities market.

b. The Tri-Oities area Unlike the Iinneapolis territory, from which Linco withdrew in 1949, it is still operating in the Tri-Cities area. However, Giachetti claimed that there was a decline in the volume of his sales in the Tri- Cities market beginning in 1948, which continued until 1952 resulting in a loss of approximately $8 000 during this five-year period.

Like the Twin Cities area, counsel in support of the complaint offered figures purporting to show Linco s sales for each year from 1946 to 1951. However, the figures after 1949 were not supported by invoices or other basic data available in the hearing room for inspection by counsel for respondent, and these exhibits Were stricken (R. 2273). The figures of case sales of Linco from 1946 to 1949 are as follows:

1946______----- ---------- 7 164 1948______--------------- 7 611 1947 ------- - 7 424 1949___ -------------- 6 124 It may be noted that while the figures for 1949 show a decline of approximately 1 500 cases from the preceding year, the most drastic deal that Purex had in the Tri-Cities market was a 1-2 deal, which went into effect in April 1948. Yet this deal apparently had no effect on Lineo s sales during the year 1948, the figures disclosing that its sales during that year exceeded those of the preceding t,vo years. Giachetti sought to attribute the decline in his company's sales to Purex competi60n. I-lis testjmony as to how he knew Purex wa.s the culprit is a masterpiece of evasion, comparable to the testimony of Norton, referred to above, \with Giachetti indicating variously, (1) that he got his information from his salefimen or offce records, (2) that he may ha.ve gotten it from the jobbers and the retail stores himself :! Giacbetti admitted having a 1-10 deal in addition to the 20-cent CO\lllll (Jeal (R. 2186), aud was extremely evasin Ils to whether his company also had other deals (R. 2308).

140 FEDERAL 1'TRADE COMMISSION DECISIONS Findings 51 F. T. G. (3) that he couldn t specify the date when he was informed by customers regarding the reason for their decrease in purchases, (4) that it might have occurred in 1952 or in 1948, (5) that the customers probably" did advise him that Purex was responsible for the decline in orders from his company, although " 1948, that is a long time ago and (6) that they definitely did so advise him (R. 2301-2304). Despite the alleged decline in Tri-Cities sales beginning in 1949 and his withdrawal from the Twin Cities market in that year, the figures of Linco s over-all operations reveal that the year 1949 was one of the company s most profitable years, its net profits amounting to approximately $161 000. i'lhile profits in the years 1950 and 1951 declined to approximately $40 000 and $86 000, respectively, they rose again in 1952 to $115 000.

In view or the confusion and contradiction in Giachetti s testimony and the failure to supply information contained in the stricken exhibits, the state of the record is such that there is no substantial or reliable basis for finding that deals instituted by Purex in the Twin Cities or Tri-Cities areas were the factor, or a major factor, responsible for any alleged competitive diffcnlties which Linco may have experienced in these areas.

5. Hercules bleach This bleach is manufactured by Hercules Laboratories of Minneapolis, which is operated by Lincoln Hamilton as a sole proprietorship. This company has been in business since October 1947, when it bought out a,another manufacturer, and is a relatively small operation, employing only two part-time employees in the nmnufacture or bleach. The proprietor, Hamilton, does his own selling. Although Purex s best deal in the area, one free case with two, had been in effect since July 1948, Hamilton testified that Purex did not come to his attention until 1949 (R. 1172), and that by 1950 he began losing a number of his retail accounts due to Purex competition (R. 1177). Among the accounts which Hamilton claimed he lost due to Purex competition in 1950 was the Fairway Stores, where, according to Hamilton, he was advised that he couldn t compete with Pure x prices (R. 1185). However, the buyer for F"irway Stores, Guy H. Klapper, who was also c"lied "s " witness in support of the complaint. testified that his firm had given up handling Purex bleach back in 1945 (R.1862).

Despite the difIclllt.ies which he allegedly experienced bccallsc of Purex, Hamilton testified that since entering the business, he hacl moved from the space in the basement of a garage in "hieh he h,H1 ____ PUREX CORP. LTD. 141 100 Findings originally started in business and built his own manufacturing plant had installed an automatic bottle filler, and had gained in the number of customers (R. 1208). The testimony of this witness hardly funishes a substantial basis for a finding that Pnrex s competition had any material adverse effect upon his business. 6. Clorox bleach This bleach is manufactured by the Clorox Chemical Company of Oakland, California, the largest company in the business, and the only one having a national distribution. The attorney in support of the complaint offered the following iigures of case sales by Holbert Company, Clorox s broker in the :\Tinneapolis territory, during the period 1945 to 1952 (eX 96) :

1945- ---- 11 731 1949______-- -- 8 786 1948______---- -------- 11 988 1950__ ------- 12, 873 1947 - -- 10 959 1951-_____-------- ---- 6 899 1948______ -- 8 537 1952______-- -- 6 168 Counsel in support of the complaint argues that because there was a decline in Clorox sales during this period and an over-all increase in Purex sales, it must be c.concluded that Purex s deals were responsible for this condition.

This argument is not supported by the record. In the iirst place representatives of Clorox s broker, who were caned as witnesses by counsel in support of the complaint and whose testimony counsel now characterizes as "indifferenf' , could not attribute any decline in Clorox s sales to competition from Purex (R. 1704, 1889). Secondly, the figures which counsel in support of the. complaint cites in his brief do not support his argument. In comparing the figures of the two campa-nics, he has used figures of Purex sales through it.s Thfinneapolis territory, which includes all of )finnesota, South and North Dakota and part of 'Wisconsin (CX 74), while the CJorox figures which he cites only cover the territory handled by its broker, the Holbert Company, which is the southern half of )finnesob (CX 98, R. 1889). )fareover, the Clorox figures themselves do not justify the inference which counsel seeks to draw. Thus, while there is a decline of 2 000 to 000 cases in 1948 and 1949 over the previous years, the year 1950 when Purex s 1-2 deal "Tas still in effect, shmvs the greatest volume of case sales during the period in question. On the other hand, in the years 1951 an(11952, after the termination of Pm' s 1-2 deal, Clorox sales decreased by about 50%. It is thus not possible: merely from , Findings 51 F. T. C.

these figures, to infer that Purex s low prices resulting from its deals were responsible for any downward trend in Clorox s sales. 7. Hypo bleach The record does not disclose the name of the manufacturer of this bleach or the details of its operations. No evidence of injury by Purex was offered with respect to this bleach. However, a number of witnesses referred to it as one of the leading competitive bleaches in the low-price field. The figures of the National Tea Company disclose that Xational Tea made substantial purchases of IIylo throughout the period in question, and that this volume continued, without substantial variation, despite Pnrex s competition (CX lod- E). Conclusions as to Twin Cities and Dakota markets The record discloses that during the period 1947-1952 Purex was in competition with at least the following bleaches in the Twin Cities market and surrounding areas: I-lilex, Clorox, lIylo, J\:leen-ez, Sav-aday, Linco and Hercules. Hilex is the biggest-selling bleach in the area, its sales exceeding those of all other companies combined. Despite competitive conditions, sales from both its T-.vin Cities and Denyer plants have increased substantially during this period and it has continued to maintain its dominant position. The main complaint voiced with respect to it appears to be that it was not permitted to expand at a rate which would have established it as a virtual monopoly in this area. This is hardly a basis upon which to base a finding of injury to competition. The evidence with respect to the Clorox Company likewise does not support a finding of injury to competition resulting from Purex s deals. \Vhile its sales have fluctuated during this period there is no correlation between such fluctuation and Purex deals. There was no testimony that Purex was responsible for any decline or from which an inference to this eifed may be drawn. the case of the small competitor, J-Iercules, the testimony regarding the alleged loss of severoJ accounts by it was directly contradicted by at least one of the customers and was unsubstantiated by any records or the company. Despite the claims of injury due to Purex competition J-Iercules condition has actually improved since it entered the market. This hardly furnishcs a reliable basis for a finding of injury. No evidence was offered concerning the manufacture of Hypo bleach and the record Jails to show that Purex competition had any adverse effect on it.

In the Cilse of IOeen-e2, Linco and Sav- clay, the fact that they )\,81'e forced to quit the market or cha.nged ownership is indicative of the fact that they had experienced diffculties of some kind. However, the ::

PUREX CORP. LTD. 143 100 Findings record does not support a finding that Purex s deals were a substantial factor in their troubles. In the ease of Kleen-ez most of the evidence of injury pertains to areflS where there was no reliable evidence to show wlmt deals, if any, Pl1CX had. Although the record does contain reliable evidence of Purex deals in the Twin Cities area. after 1947 the testimony of the witness Shapiro with respect to injury by Purex "vas a mass of cont.radiction and confusion, was unsupported by any documentary evidence, and was contradicted in many respects by other wit.nesses or evidence offered in support of the complaint. Shapiro testimony affords no reliable or substantial basis for a finding of injury. The testimony and evidence with respect to Sav-a-day bleach JI'e likewise eharacterizcd by confusion and contradiction of such magnitude as not to afford a reliable or suhstantial basis for a finding that Purex s deals were responsible for Sav- da:is iinancial troubles. Significantly, the company which succeeded the original manufaetnrer of Sav- day has improved its competitive position despite the competition of Purex. In the ease of Linea, the unrelinbility of the witness Giacl1etti and the inemnpletc state of the record insofar a.s the evidence of his company s sales is concerned are such that there is no reliable or substantial basis for attributing to Purex s deals the r(' ponsjbi1ity for t.lmt COlnpflly's diffculties. Counsel in support of the complaint places considerable emphasis 011 the large increase jn Purex sales during this period as tending to f'stabljsh injury to its competitors. \Vhile the rate of increase in urex sales between 1045 and 1052 ",vas substantial, as compared to that of some of its competitors, it should be noted that Purex had been more or less quiescent in this market durjng the 'iVaI' and, in effect reentered the market around H)c17. It put on a strenuous advertising campnjgn and brought a number of its retail specialty salesmen into the market. It is therefore natural to expect a greater rate of lncrease from one star6ng more or less at the bottom of the market than from competitors who had already reaehed a certain peak in the market. It should also be noted that there is no necessary correlation between the rate of growth of its sales and its vrtrious deals, as contended by counsel supporting the complaint. Thus its sales during lD48, during which the 1-2 deal was in eflect for about six months were about 5 000 cases less than its sales in 1947. ,Vhile there ,vas Pnrex s annual case sales in tile l\Iinneapolis territory between 1945 and 1952 were a" fujJows:

1945 ----- 17, f)86 1949 ---- 11-- 201 1946 - TUG 1U30 - J::, 195 1947__ 32, 3"37 1951 ------- 88, 48 -- 138 lU52 - 10U 45G ..n7, ;;8- , , , 144 :FEDERAL TRADE COM'-ISSION DECISIONS Findings 51 F. T. C. a substantial decline in 1951 after the termination of the 1-2 deal there ,'dls a substantial increase again in 1952 despite the fact that there "US no change in prices. The figures alone are too inconclnsiyc to justii'y the c1nnying of any inference, such as that suggested by counsel supporting the complaint.

The 1-2 deal which PllleX had in the 1Iinneaplois territory from J uIy 19,,8 to December 1950 unquestionably represented a substantial )Jrice reduction. llthough l'cspOmlenl has not yet offered its defense ome of the eviclenceintroduced by counsel snpporting the complaint sheds senne light on the reasons for the institution and continuation of respondent's deals in this area. Thus letters from Purex s broker to the respondent during 1947 find 1948 reilect the- diffculties ,,-which respondent experienced in getting establjshed in this market, referring to such matters as lack of consumer acceptance in the area, the keen competition of other bleach companies: the fact that certain customers were threatening to drop Pures, and the fact that competitors \\ere oneringvarious deals and price concessions (CX 3G- J-I Q). In any event, il'espective of ,.,hy the deals \were instituted the fact that Purex was able to increase its sales during this period does not establish that any injury to competition resulted therefrom. ,Vhile some of its competitors may have sustained a. loss of salps, it does not follow that such losses can be attributed to Purex s deals. As stated by counsel supporting the complaint in his brief (p. 38) : The nf1kec1 and single fact that respondent' s competitor's lost ('custom( n; 01' that their sales Volume W!:S reduced or that they overated on a relluced IJ)'ofit or that iller reduced tbpir prices to remain cOlnlwtiUve is Illlterial but not legally . ignificont -in and oj 'isrlf to the 'u.ltimate issucsil1, this ease lcithout (I. further' showtuf! that the FeILl rea,wn lay in the respondent's diBCliminatrw pdC'ng policies (exCCIJt that an inference may be drawn frow this and other facts). LItalics supplied.

The. evidence offered to sho\y that Pllrex \,"as responsible for these losses i too inconclusiye to justiJ'y any such finding, It is accordingly found that the record is lacl;:ing in subst.antia) reliable and probatiyc evidence of any injury to competition with respondent in the Twin Cities area, Tri-Cities market or any of the other adjacent areas discussed alJove., B. The Des 111 oines territory The only evidence of alleged1 injury to competition in this area relates to S &, S Cleanser Company of Des ::1oines, lmnt, manufacturer of a bleach called "Des 1\loine8 Cleanser . Counsel in support of the complaint endeavored to show through the testimony of Gino Sasatel1i, rt partner ill this linn, that it had susta1necl a loss of approxi- PUREX CORP. LTD. 145 100 Findings mately $40 000 because of Pllex competition, and had lost a number or accounts and suffered a loss of volume because or Pun s deals. The examiner found Sassatelli a wholly unconvincing witness ,,,hose testimony was replete with confusion and contradiction and -whose claims "were based in large Ineasure on hearsay and surmise. , this With respect to the so-called loss of approximately $40 000 "as based all the fact that Purex, according to Sassatelli, had put on soHle kind or a deal ,,: ':: ::: \yay back in '42 and '43' (R. 2214-5), which nIJegedly forced Snssatelli' s lirm to put into effect a deal or one :fn c with 12 in order io meet competition. The figure or 840 92-: lost ' was based on an estimate of the number or free cases given each year beginning in 1945. The claims regarding this so-called $40 000 less" are based on sheer speculation and arc unsupported by any reliable or substantial evidence.

In the first place it should be noted that the alleged $40 000 "loss does not represent an actualloes or deficit in the company s operations as the term is commonly understood, but is merely an estimate of the cost of free goods. Secondly, it should be noted that the estimate ,,"as not based on any books and records of the company but on some compntations made by SassateIl after he had come to the hearing (R. 2536). In the third place there is no reliable evidence in the record of the "some kind of deal" which Sassatelli claimed Purex had inaugurated ""ay back in '42 and ' ' and there is therefore 110 ,vay of determining whether Purex was responsible for Sassatelli' s institution of a 12 deal and the ensuing "loss Finally, there is grave reason to doubt the veracity of Sassatelli' s story regarding the so-called $40 000 loss. At first he testified that his company had had a steady growth from 1936 until about 1947 or 1948, when Pm'ex "startledJ to come in with some kind of deals" (R. 2230). He further testified that prior, to 1947, the ranking of the various firms in the Des 1oines area" in terms of bleach sold, was: his own company first, Clorox second Hilex third, and Purex fourth (R. 22:J8). On the basis of this testimony Purex was the least potent of his competitors and gave him no trouble until 1947-1948. However, he subsequently reversed himself and claimed that Purex began to bother him ' vmy back in '42 and '43" and that this was responsible for the 1-12 deal which he pnt into effect and maintained for about ten years. Adding Turther confusion to Sassatelli' s story about being forced to institute and maintain a 1deal beginning about 1942 or 1943 is his own testimony that during 2- WJJiJe tlle record does show that purcx hud I\ 1-2 deal in 184R , the burden of Sassatelli' s te tillon:v was that it was "before ' 48" that his own deal was put into effect to meetPurex competiton (R. 2244).

____ __ (;(j ___ 146 FEDERAL TRADE COM;IIlSSIOX DECISIONS Findings 51 F.

the war years he was able to sell all the bleach he "could get (his J hands on" (R. 2535) .

Aside from the so-called $40 000 loss, counsel supporting the complaint relies on Sassatelli's testimony regarding the loss of a number of customers completely and a decline in sales to other customers, as a result of a 1-3 and a 1-2 deal instituted by Purex during 1947 and 1948. Sassatelli named a number of accounts which his company lost in its territory outsidc the City of Des Moines in 1948 (R. 2236), and stated that while it didn t actually lose any accounts within the City of Des Moines, there "as a loss in sales volume there in 1948 and 1949 (R. 2241). SassateII also claimed that "whereas he had formerly sold 75% of all the bleach sold in the Des Ioines area, Purex competition had reduced his volume to about 50% of the market (R. 2488).

Aside from the fact that a decline from near monopoly proportions to approximately half or the market is hardly indicative of injury to competition, an analysis of Sassatelli's testimony regarding these losses reveals that it is cut frolll the same cloth as that relating to the so-called $40 000 loss. In the first place his testimony ,,lS based purely on his memory and ,vas unsupported by any records hO\yjllg what acc.ounts he sold to, how 11luch he sold to these accounts, and when they ceased buying or cut their orders (R. 2508). In the second place his testimony attributing the loss of a number of stores outside of Des :;Uolnes to Purex was based on hearsay information received from his dri vcr-salesman since he did not himself call on any accounts outside of Des Moines (R. 2236). Thirdly, there is reason to doubt that he sustained any substantial losses in business as a result of Purex deals. 1"01' example, after testifying that he had lost business in the Super Value Store (R. 2517), he conceded on cross-examination that his sales to this account had actually increased (R. 2520). Further, while e1aiming that the 'worst effects of Purex competition occurred during 1948 and 1949 (R. 2236, 2241), the figures of gross sales submitted by Sassatelli l'cveal that there "ere actually increases in sales in each of these yea,rs of $6 000 and $13 000, respectively, over the preceding year (R. 2225). While the year 1950 shows a decline or 88 000 from the 1949 volume, the year 1951 show ed an increase of $10 000, the same, volume continuing in 1952, thus resulting in the largest volume of sales since 1946.

5 The figures of g"I'OSS sales submitted by Sassatell are as follows: :080 000 1946 $70 000 1050 n---- 1947 ----_-- OOO H1:J1 _ ------------_u 90, 000 1948 ------- 75, 000 1952 ---- _nu DO, 000 1949 ---- __n_---- 000 PUREX CORP. LTD. 147 100 Findings Despite SassateII' s claim of injury by Purex, the record shows, according to his own admission: (1) that the number of his customers has increased substantially since 1946 (R. 2529), (2) that he has expanded his territory since 1946 (R. 2534), (3) that he has expanded his plant at a new location from a capacity of 1 500 gallons per day in 1945 to 4 000 gallons per day at the present time (R. 2498), (4) that hc has increased the number of his employees since 1945 (R. 2497), and (5) that he is able to get his bleach into every new store opening in Des :\1oines (R. 2531). "While not disputing the facts as to Des Moines Cleanser s over-all growth, cOllnsel supporting the complaint argues that due to Purex the rate of growth ha,s not been as great in rece, years as it formerly was. The ans'Ivcr to this is, it is not unusual for the rate of increase in the post-war period not to keep pace with that in the war period when Sassatelli was able to sell all the bleach he "could get (hisJ hands on." )rloreo,cr, had his company continued to advance at the same rate, its 76% estimated share of the market might have reached complete monopoly proportions. The failure of this to occur can hardly be called injury to competition. It is accordingly concluded and found that the record is lacking in reliable, probative and substantial evidence of any injury to competition with Purcx in the Des l\Joines market.

C. ill mnphis te1 l'itoTY wid otkeT southern i!dates COlmsel in support of the complaint offered evidence purporting to sho\\' injury to competition to three competing bleach manufacturers in the l\lemphis territory. The evidence with respect to each of these companies is discussed separately below. Berore discussing the evidence of injury, it should be noted that the evidence of the deals which Pl1rex offered in the 1cmphis territory shows that the deals in effect in tlult territory were of much shorter duration and involved less drastic price cuts than those in the Minneapolis territory. Most of the cleals were in p,uect for only a month or two and involved one free case with nine, or n reduction or approximately 10% (CX 7, p. 5). 1. Bleach Kleen bleach This bleach was manufactured by Southern Specialty Company or j\1emphis, which is engaged in the manufacture or sale of a wide variety of otller products including glass cont.ainers, spices! insectieides and furniture polish. It manufactures both household bleneh and laundry bleach, the t,yO bleach products accounting for about 12% of its total business and t.he household bleach n.lone amounting to only about 4% of its total business (R. 2082). The household bleach is ,, , , . ,;, : ,;, 148 FEDERAL 'TRADE COMMISSION DECISIONS Findings 51 F. T. C. a 5\ % sodium hypochlorite solution, while the laundry bleach is a 10% concentrate, and the two are not competitive. In support of his chime of injllry by Pnrex counsel offered the testimony of t"\yO salesmen and that of the o"\nlcr of the company. The two snJesrncn only \ worked for Southern Special1t:.r Company on it part-time basis, and handled a Illu11lJer of other items in addition to bleach, the latter being only a sideline which they evidently did not push too hard (R. 2060, 2122). 'Their t.estirnony of injury to competition was of a l"other desultory nature. One of the sH.lesmen IIenry l1twick, testified in general terms about being unable to meet the prices " of the different compallies, referring apparenOy, to Clorox as weIJ as Purcx (H. 2(47). lie (testified that ,,'hen he came into one of the st.ores, they figured out the prices and shoTfec1 him that the price or Pm'ex ,yns cheaper. Asked ,,'hen this all occllrecl, Hart\\"ick testified )Iaybe last year, years ago. 1"11 70 years old. I cnn t re" mcmhc1"Hll those things and I am llsing this as a sideline, (H. 20JD). The other salesman Tulius Lyon, toi(l at having heard in the stores about a Purex deal at one' "ith nine, and t.hat. he was unable t.o sell his bJeach. LYall couldn t llame any ae-counts lost by him, was unable. to state \yhen he had experielleed this diffculty in selling, ancl admitted that he didn t pay too much aitelltion to the ma.tter (R. 2117).

"ihi1e the O\Yl1m' of the business, Sol .Jaffee, appeared to be marc familiftl' with the competitive sit.mltion than his two salesmen, his testimony likewise falls far short of establishing any substantial injury to competition resulting from Purex s deals. ,J af1ee c.laimed that there \ya a 50% drop in hi hou ehold bleach bu iness beginning in JD46, whi('h he c11limecl was clue (0 Purex deals (E. 2090). This testimony has no probative yalue for two reasons. In the. first place there is no reliable eviclenee in the record of any l:Jnrex deals in l\Iemphis during 1946. It is not possible there,fore to attribute this alleged loss of business to unknown deals. Assuming, ho\yeyer, that part. of this loss oc.enl'recl during 1947 , \vhen there is evidence of Pm' deals T aide s own testimony establishes that a considerable part of his loss of business \Yas clue to reasons other than any alleged price aclnlltage nCCl'l1il1g from Purex deals. Thus J aJIec s testimony indicates that during 1947 a large wholesaler, Thla10nc 8: llycle, instituted a cooperative plan 1 II del' which its affliated st.ores "ere, able to buy merchallclise at cost pins a ;J% cOllunissioli. As a result of this HlaJlY of (he better retail s(orcs became aIrdiated with the :\Ialone & Hydc co-op cllusing .J rdfe,e to be "shut out of the better stores and the only thing left to us was dirty front stores that "' ere not affliated "ith the PCREA: CORP. LTD. 149 100 Findings (R. 210;)). It is thus apparent that the major cause of any decline in 1947 was the affliation of the better stores \viih the co-op. That this had no connect.ion with any price advantage arising from Pure-x deals seerns apparent. from .TaJi'e s own testimony that the customers trading in these stores were "more interested in the brand than they "'ere in the price" (R. 21(5).

The PUl' s deals in :ilemphis during 1947 were of such a limited nature that they could hardly have produced any such drastic effect in the market as that claimed by JafIec. Thc first dcal, which went into effect April 7, 1947 and lasted for two months, was a deal of 1 free with 10. The second deal did not go into effect until August 13 1947, lasted only a month and called for 1 free case with 9. It should be noted that the so-called 50% drop in Jaffee s business actually involved a drop in household blcach from about 870 of J afree s overall business to about 4%. Since the record furnishes no clue as to the extent of J affee s business, no determination can be made as to the actual amount of the alleged decline, either on a clonal' volume or case volume basis. In any event, the undersigned is satisfied and finds from the record as a whole that there has been no showing of substantial injury to Southern Specialty Company as a result of any Purex deals.

2. Sav-a-day bleach This bleach \vas manufactured by the Barton Company, the same company as that referred to above in connection with the )1inneapolis territory. The evidcnee offered with respect to injury to t.his company in the :Memphis territory \vas, if anything, ,,-eaker than that pertaining to the j\1inneapolis territory. 1\ 0 official of the company having any direct knowledge of its over-all operations in the area. was called to testify and none of its books and records were produced. The case of counsel supporting the complaint with respect to this company rests on the testimony of a fonner Barton salesman and broker, and on evidence supplied by several ,vholesaler ,vitnesses. The broker-salesman, Perry Lewis, ,vas employed by Barton as a salesman in its Southern Territory (including JIemphis) from December 13: 1D45 t.o ,Tune ;:10 , 1946, and then represented Barton as a broker in the l\'Ie11p11is area, from the latter date until .Tuly 1930. Lewis' testimony ,with respect to the 3Iemphis territory was to the efiect that Purex hael a deal of 1 free "ith 9, the elatc of which he could not fix since he ,vas testifying "strictly from memory" (R. 2870), which deal he opined resulted in Pure-x selling more bleach and " would say we sold less bleach" (R. 2872. ) Lewis had no figures show- Findings 51 F.

ing the extent of this alleged decline and was unable to say how much the decline amounted to. Although Lewis testified that the plant eventually closed (appareutly after .July 1950), he had no personal knowledge as to the reason for its closing, the only enlightenment which he could supply being the hearsay information that Mr. Barton had told him his volume had dropped ami that he had been losing money (R. 2872-2873).

Lewis' testimony furnishes no reliable basis for any finding tlwt there was a decline in Barton s sales, or as to the extent of such decline or the reasons therefor. In any event, there is no reliable basis for attributing any alleged decline to Pnrex s cleals. In fact Lewis' mnl testilllony suggests that SR,v- clay s prime diffculty was that it was not as well-known and ,yell-adyertised a bleach as its competitors and "\vas unable to obtain widespread public acceptance (R. 2896) ,2G The::8 competitors it should be noted, included Clorox as well as Purex (l 2895 2896). It should also be noted that even with PUl' s occasional and relatively mild deal of 1 free with fJ, Sav-a-day's prices y, ere always substantially lower than Purex In addition to Lewis' testimony, counsel supporting the complaint reHes on the testimony of representatives of several.l ,vholesalcrs in Memphis. One of these is C. B. Cook, who was employed as a buyer of bleach at various times prior to 1947 by Malone & Hyde, the largest wholesaler in Memphis, and after June 1948 was employed as a bleach buyer by Earle "\V1101resale Grocery. Counsel supporting the complaint places considerable emphasis on Cook' s testimony that J\lalo118 & Hyde stopped buying Sav- day bleach and Del Haven bleach (the latter being a private-label bleach manufactured by Barton) because of "lack of movement out of the warehouse and out of the retail markets" (R.. 2004), which lack of movement counsel seeks to attribute to Purex.

Counsers position is untenable for evcral reasons. First, there is no reliable evidence as to what, if any, deals Purex had during 1946 "dwn, according to Cook, Barton s blea.ches were dropped. "\Vhile Cook testified that Purex had a 1-9 deal at some time during the fiyeor six-year period of his employment up to 1946, he was unable to fix 2( An index of the extent of Sa\. s popularity in the market is the testimony of tle witness Hl1rtwick, salesman of Bleach Kleen bleach, tlmt he bad ne,er heard of Sa".ain this area (R. 2015).

27 During' 1\147 when purex s list price on quarts was $1.50 per case, its occasional 1deal resulted in Ii net price of $1.3G. Sat'-a- da:y s price during the earl;!" part of 1947 was 95 cents, and from September to December 1947 it had, in addition, a deal of 1 free with , rcsl11ting- in a net of SO cents per case. During 1940 'T'hen Pl1rC3; S list price was . 1.70. its ileal resulted in a net price of 81. 53. At the same time Sat'- day was selhng at a list of $1.40 with a 1-0 deal, resulting' In a Det of $1.1(1 for case (RX 6-30). , , PUREX CORP. LTD. 151 JOO Findings the time when this was in effect, pointing out that he did noc handle bleach continuously during this period (R. 2'007, 1994). The earliest reliable evidence of a 1-9 deal is that involving the period from August 13 to September 15, 1947 (CX 7, p. 5). Aside from this consideration however, Cook's testimony on cross-examination reveals that another "leading factor" in the decline of his company's orders of Sav-a-day was the fact that it had had trouble with the caps of the bottles, many of them having blown up in the warehouse and in the stores (R. 2033)." Furthermore, there is no reliable evidence that Purex deals were a factor in the so-called lack of movement of Sav-a-day. Cook specifically stated that he didn t know why Sav- day wasn sellng (R. 2005). Wl1ile Cook testified that his company s purchases of Purex increased during the period of a deal, he also stated that this ,vonId not necessarily cause a decline in the over-all purchase of other bleaches, since the increased promotion and advertising accompanying the deals sometimes resulted in an increase in the purchases of other bleaches (R. 2014-2015. Cook's testimony in this respect was corroborated by one of the offcials of :\Ialone & Hyde, also called as a witness in support of the complaint, who testified that despite such deals, his company has continued to purchase greater quantities of Clorox than Purcx (R. 2453).

Cook further testified that after he went with Earle .Wholesale Grocery in .Tune 1948 he took on Sav- clay for a while to give it a try in Eastern Arkansas, because of his personal friendship with :MI'. Barton (R. 2037), but that it was discontinued when he found he couldn t get a suffcient volume of sales. There is nothing in this testimony to warrant any inference that this discontinuance had any connection with Purex.

Counsel supporting the complaint places considerable reliance on the increase in Purex sales in l\lemphis bet een 1945 and 1952. However, no figures were offered to show a comparable decline -in the bleach sales of other companies. Thc only reliable evidence of bleach sales of another company is that involving the Clorox Company, which shows that in the period from April 19,,0 to :\farch 1953, its sales not only kept pace with, but execeded that of Purex (CX 121- 0). In any event, in the light of the other evidence in the record, as above discussed, no inference adverse to Purex can be drawn, merely because that company experienced a mbstantial increase in sales during the period in question. The record as a whole is lacking in reliable, pro- '" It lla ' be notell that wldle Couk testHiec1 un direct examination that his company had croPIJed Sllv-a- ' prior to his leaving the t'company in 1946, he corrected this un cross. examination to state that tlley had not dropped it but were handling it on a limited ba!;js (R. 2036).

, , 152 FEDERAL 'TRADE CO:\IMISSIOK DECISIONS Findings 51 F. T. C. bative and substantial cyiclellCe of any substantial injury to Sav-a-day resulting from Purex deals in this area.

3. Clorox bleach Although evidence 1with respect to competition between Clorox nncl Pl1rex in this area \,,as offered at the hearing, counsel in support of the complaint docs not devote any portion of his brief to any alleged adverse effect of Purex deals on Clorox, except incidental to a discllssian of the testinlony of several wholesaler witnesses. It is not clear whether he has abandoned finy cbim of injury to this competitor, 01' not.

Xot only is there no showing of injury but the record affrmatively c11scloses that Clorox sustaineel no injury as a result of Purex competition. J. M. McKnight, Clorox s broker in the Memphis territory, who as called us a "itness in support of the complaint, testified that Purex dic1110t have any effect on his principal's sales and did not cause it any loss of business (R. 2824). According to McKnight there has been it substntial increase in Clorox s sales in this area eueh yearsincc J946, with the ex"eption of the year J952. That the reversal in trencl in 10;)2 was not due to any PurE's deal is evident from the fact that Purex has had no deals in the area since )Iarch J952 (R. 2843, CX 158). IcKnight further stated that if not lor the competition of Pnrex CJorox ,yollld have a monopoly in t.his area. Counsel supporting the complaint refers in his brief to the testimony of the former Malone & Hyde buyer, Cook, that when he left that company in 19M) Purex "as its leading bleach. IIowever, both J. D. 13o"on\ :Malonc & Ilyde buyer since 1030, and trae Hyclt, an offcial of that company testified that Clorox has always been their leading bleach (R. 2392, 2453). Their testimony is corroborated by the actual ligures of l\Iulone & Hyde. purchases submitted by counsel supporting the complaint (CX J2J- C). Further corroboration appears from the testilnony of a representative of one of the retail stores affliated with Malone & Hyde, who testified that he sold twice as much Clorox as Purex, despite the fact that Purex was 1 cent che,i.pe.r on quart sizes (R. 2134). It is interesting to note from the testimony of this "\yitne, Gene Beretta that although he increased his purcha of Purex during a 1-9 deal, he did not decrease the reta.il price of Purex to reflect the. deal, but preferred to pocket the sflvings resulting from the deal (R. 2J3(;). There hes been no sho"ing on the record as a. "\\hole that Purex deals hayc caused any substantial injury to its competitor, Clorox.

: , PUREX CORP. LTD. 153 100 Findings 4. ':Other Southern Territories In c.onnectioll \with his claim of alleged injury to competition in the :1\1emphi3 area, counsel in support of the complaint also sought to ho\V that Purex s deals caused injury in "other southern territories Counsel relies, in this connection, on the testimony of Perry Lewis the former Barton salesman and broker, and D. II. Blackard, a fanner Purex district manager, as showing that Purex deals caused injury to competition in the Florida, Alabama and Georgia areas. The testiwony upon which counsel relies wholly fails to sustain his claims. Lewis testified that while acting as a salesman for Barton during early 1946, he ran up against a Purex deal of 50 cents off per case in the Florida area, and a reduction of 25 cents pel' case in the Birmingham area. ",With respect to the Florida area, Lewis fixed the date of this deal as January 1946, and stated that he had " heard'; from wholesalers that Purex was coming into Florida with that type of deal (R. 2865). While claiming that this affected his sales of Say-a-day Lleach, he conceded that the sales resistance which he met \vas also due to the fact that the manufacturer of a new bleach Thirty-Three ,yas putting up a pbnt in the Florida area (R. 2866). There is reliable evidence in the record, aside from Lewis' hearsay testimony, that Pnrex did sen some bleach in the Florida territory between K 0- Yelllber 1945 and April H,M6 , at discounts of 10 cents, 25 cents and GO cents per case: as part of its effort to break into the Florida Inarket (CX 1D-13 through -P; R. :)18-31D). Hmycyer, this etIort "as U11uC'cessful: and Pm'ex withdrc\\ fronl1 the market in early HM,7 when its sales clroppe,d to negligible proportions (R. 320; ex 31-.\ and B). o evidence \yas offered as to the extent of Barton s operations in the Florida territory, 1101' is tlllre ally reliable IJ!lsis in the. record for inferring that Purex s short-lived dents lwc1 any substantial etrect on Sav-n-cay sales in this market.

,Vitli respect to the Bil'miJlghall Alnbama, situation, there is 110 cyidence, aside from Le\\is' hearsay testimony, of any Pm'ex deals in tJJatm:uket dllrillg :JIRrch or Apri11U-iG, the period about \which he testifiec1,20 Like\\"ise, there is no eyic1ence of the extent of Bartoll operations in this area nor Hny evidence from ,,-hlch any inference can be c1ra\Yll as to whether Barton sustained nny substantial injul' in this rnnrket.

Counsel supporting the complaint also relers in his brief to the testimony of a former Purex district manager in JIenlphis B. H. Blackard, l'egRrding a " one free with OlW deRJ in part of hi:: tcni- TIle ('arlie t reHahle €yj(lence of U!l . deal in the Eirulillgl1am area js a (ical of 1 free witJl 10 in - prillD4"i (CX"i, p. 1).

Findings 51 F.

tory. Counsel apparently suggests that this deal was in effect throughout the tel'itory in which Blackard operated, including Tennessee, Arkansas, Alabama and Georgia. However, it seems apparent from Blackard' s testimony, that he was referring to a deal which was in effect only in Georgia (R. 2853). Blackard's testimony regarding this alleged deal was extremely vague. He was unable to fix the date 01' duration of this deal and could not recall whether it was a jobber deal or involved a coupon arrangement on the consumer level. lie conceded that there was never any such deal in the l\1:emphis tel'itory. In the absence of more definite evidence as to the nature of the soealled1-1 deal in Georgia, andlaeking any evidence of the competitive situation in that market, there is no basis for any inference adverse 1O Purex to be drawn from l3lackard's testimony. The eX;lmincl' concludes and finds that there is no substantial Jiable or probative evidence of any substantial injury to any of Purex s competitors in the areas discussed above or of injury to competition with Purex in any of these areas.

D. Dallas Division The evidence offered with respect to injury to competition in this area involved three companies: l-Iilex Company (to which reference has already been made in the :\Iinneapolis territory) ; Airox bleach manufactured by Joseph Goldman (to whom reference has also been made in connection with the discussion of Continental Laboratories in the :\Iinneapolis tCl'itory) ; and the Charles H. Ketherson Company. Before discnssing the evidence with respect to alleged injury to the above companies, reference should be made to the evidence con- Lcrning the deals which were in effect in this area. The Southern Division, also known as the Dallas Division, is one of the divisional offces of the respondent, and includes within it the following brokerage territories in Texas: Abilene, Dallas, Tyler Houston and San Antonio. In addition, this division includes Albuquerque, New :.vexico, and the states of Colorado and Oklahoma. Unlike the Minneapolis, Des "Ioines and Memphis territories, in which the attorney supporting the complaint offered a single exhibit setting forth all of the deals in these territories from April 1947 to December 1950, no over-all exhibit was offered with respect to the deals in the Southern Division. In his brief counsel supporting the complaint refers to a list of deals which were appEcable in the AbilcnB territory from 1942 to 1950, and states that these are typical of the deals in e,ired in other territories comprising the Dallas Division. IIowever, aside from a similar list for the Tyler territory, the record fails , , , PUREX CORP. LTD. 155 100 Findings to establish what deals were in effect in the other tel'itories comprising the Southern Division, except for limited periods of time and in cert.ain of the territories within the Division. Counsel supporting the complaint offered several exhibits showing thc deals in effect in the Dallas territory between April and October 1949 (CX 27- 1' and -Il), and in the DaHas and Houston territories between July 1950 and September 1951 (CX 29-A). In addition to these, counsel relies on a series of bulletins issued by the respondent to its brokers and jobbers in the Southern Division during 1948 and 1949 which announce the inauguration or withdrawal of certain deals on designated dates (CX 15 series). However, it is impossible to detennine from these bulletins just how long H part,icl1lar deal which was being announced remained in effect and just 'when a particuJal' deal which was being revoked had been institutoo: Counsel also relie.s on certain invoices and ledger sheets as establishing the cleltls in this area. ,Yhile a fell of the invoices show fl. deal of 10 cents off list price per case during November and December 194(;, in the DaDas territory (CX 21-H through -Q), it is impossible to determine from the remaining invoices andlec1ger she.ets "hat the deals inyolyed achmlIy were (CX 22 series). It is r lus difficult to determine, on an over-all basis, what deals were in effect in the various territories comprising the Southern or Dallas Division except for Jimited periods and in limited areas. This lack of cIuity in the recorclmakes c1iiIcult an evaJllation of the claims of the various competit.ors that they were injured by Purex deals in this area, since a. hrge part of the evidence relates to periods when, and areas where it is not clear what deals, if an)' , Ivere in effect. '\With this preliminary discussion, the examiner turns to an analysis of the proof of injury to competition offered by counsel in support of the complaint with respect to the three companies mentioned above. 1. Hilex The IIjlex Company began selling in the Texas area. in the latter part of the 1030' , and opened a plant in Dallas in the early 1040's. It remained in this area until 1952, when it closed clown its plant and ceased operating in this Hunket, except 1'01' parts of \Ve.st Texas \', which it has continued to service from its Denver plant. The figures of I-lilex s operations from 19,13 to 1950 how that the compa.ny lost Altbougb it was ap!iarent that tlle e I'xbihits were not arranged in an - ord,';: fllsllion to retleet, c!Jrolloiog-ieall:', t11e eomlUeneelll'nt n1l1 tcrmhw.tion of caeh deal tbi an-a, nn\! conllsel for 1"espo1Hjent oITeH'(j to cnoperatf' in an etrort to aebil'YP . ')me orc1er1;, nrraDI!('ilent. cond pJ i!UPl1orting The complaint app€flr8 not to J1aye a\'1iJed iJim,,'Jf of tllis ofter (R. 382, 364).

______ 156 FEDERAL TRADE COMMISSION DECISIOKS Findings 51 F. T. C. approximately $433 000 during this eight-year period (CX 88-95). Counsel supporting the complaint seeks to attribute these losses to Purex competition, and, in particular, to the Purex deals in the Texas territory. In the opinion of the examiner, this conclusion is not justified by the record.

Although A. A. Eldredge, president of Hilex, claimed that his company had been "going along pretty good" until Purex came into the market early in 1946 with a deal of one case of quarts free with each case of gallons (R. 1559), Hilex s figures show that, except for the year 1945 when it made a profit of $10 000, it lost money each year it was in the market beginning with 1943. The testimony of Purex offcials discloses that Purex did have an introductory deal of one free case of quarts with each two cases of half-gallons, which was in effect in most of Texas, except for Abllenc, for about seven "\veeks early in 1946 (R. 267). The record of deals in Texas thereafter is somewhat spotty. However, the most drastic deal a appeals to have been one free with nine, which was in effect periodieal1y between 1947 and 1950. Contrary to Eldredge s testimony, Hilex s own records (Hecloes that except for the period of the seven-week introductory deal in 1946 Bilex s net prices were substantially lower than Purex s. This was true not only of the regular Hilex bleach, but even more so in the case of a private-label bleach which Hilex began to manufacture and sell in 1947." In view of the fact that Hilex s losses began even before the time when there was any claim of diffcnlty with Pnrex, and that its bleach ,vas generally lower in price than Purex, it does not seem rt'Dsonable to assume that Purex s deals were the cause, or even a major factor in Hilex s financial diffculties.

The Ililex witness, A. A. Eldredge, had little personal familiarity with the Texas situation (R. 1(23). His brother, Fields, was in charge of the Dallas plant (R. 1552), and A. A. Eldredge s only personal contact with the Texas situation appears to have been in 1946 when he went down there and allegeclIy was informed about the alleged Pm' ex 1-1 deal (R J5fil). Even Eldredge was hesitant about attributing any part of his companies losses to Pnrex s competition (R. 1621). 'While the deal of one free case of quarts w-ith the purchase :i Pnrex s average list price during this period was $1.6J per CftSI', whicb resulted in a net price of about $1.45 during the period of a 1- 9 deal. Hilcx s own figures sllo,\' the follo"\yingnet prices during the period 1046-19rio: Hilex bleach Priva,te-label 194G_ ---------- 1. 214 1947- - 1. 1948__ ---------- 1. 81(; 1849______----- - 1. 334 911 l!1GO___-- - 1. 328 1.253 PUREX CORP. LTD. 157 100 Findings of each two cases of half-gallons did represent a substantial cut in the price of Pllrex, the record does not support any inference that this seven-week deal was a major cause of lIilex s financial diffculties. In fact, contrary to Eldredge s testimony that the deal caused his company's sales to drop about 100 000 cases (R 1559), there was only a difference of approximately 4- 000 cases between IIilex s sales in 1945 and those in 1946. iVhile the year 1946 showed a loss of $60 000, as against a profit of $10 000 in 1945, this change was due to a number of factors, including not only increased advertising expenses, but a substantial increase in the salaries paid to offcers. Outside of the limited 2 introductory deal referred to above, Purcx S other deals, consist ing mainly of one free case with nine, were hardly such as to affect Hilex s ability to compete. 'Vhile it seems likely that Purex s coming into this market after the war and competing for business 1'ms a factor to be reckoned with by Hilex, the record is lacking in substantial evidence that Purex s deals, as such, played a significant part in Hilcx financial diffculties, which, as already mentioned, preceded Purex entry into the market in 1946.

2. The Charles H. Netherson Company This company is an individual proprietorship owned by the individual whose name it bears. :Net-horsoD began the manufacture of bleach in January 1040, when he purchased the plant of Hood Chemical Company at Dallas, Texas. 1-1i8 business has been divided equally between laundry supplies, laundry bleach, and household bleach. During 1940 most of the household bleach manufactured by him consisted of private-label bleach made for particular customers. However, in November 1949 N etherson bought out the bleach plant of J olm Jlaher in Houston, Texas, and acquired the lauer s brand label So-\Vite . During the year 1949, Ketherson s operations showed a net profit of $33 157, on gross sales amounting to $232 815. In the year 1950, although Netherson s gross sales increased to approximately $280 000, his net profits declined to approximately $14 000. In vember of that year he closed his l-1houston plant, and since then has confined his operations to the Dallas area. In 1951 anc11952 his gross sales declined to approximately $185 000 and $130 000, respectively, and his net profits to $G OOO and $4 000 , respecti,'ely. Netherson sought to attribute the closing of the Houston plant and his companis failure to expand in the Dallas area, to the unfair competition The figures for these two years 'Were !l follow 1045______ :!82, 40G ra E'S 1946_____ 2SR 420 cases , , Findings 51 F. T. C. of Purex s deals. Discussed below are some of the marc salient fetltures of Ketherson s testimony with respect to the "arions areas whr1'e he claimed he met Purex competition:

a. 0 klahoma N etherson testified that he withdrew from the Oklahoma market where he had one ac.count, because he was unable to me,et an alleged Purex deal of one free with one which he claimed \Tas prevalent in that market around July 1050 (R 2547, 2771). However, there is no evidence in the record to show that. Purex was selling in the Oklahoma market on a one free with one basis, other than Kethel'son hearsay testimony t.hat there were newspaper adverHsements (which he evidently sa-w) offering Pnrex for saJe in the retail stores on the basis of one quart for 13 or 14 cents and one quart free (Ii. 2547), ancl that his broker in Oklahoma City had informed him that a one free with one deal was "prevalent" (R 2771). The only reliable evidence jn the record relating to Purrx deals during 1950 in any of the territories in the DaUas Division relates to the Dallas and Houston territories and shows that from J uly 1, 1950, to Apri119, 1951 , there were no derzls in effect in those territories (CX 28-A). The only reliable evidence as to deals in the Oklahoma territory coyers the period from April 1048 to October 1840 and (iiscloses that (luring this period Purex either had a deal of one free with nine (CX ";,-E a11) - I), or no deal (CX 55-K), or a deal of 18-21 cents of!' list (CX 55- 3). Lacking reliahle evidence of Purex deals in the Oklahoma territory llt or about the 6me when Ketherson cbimed he withdrew, t.here is no basis for determining ,whether Purex s deals were the cause of Netherson s aue,ged withdrawal from this market. b. l'yZe1' , Texas Ketherson testified that when he tried to expand into the East Texfls (Tyler) market in the summer of 1850 he was told hy the buyer for one of the wholesalers, The ::Inyfipl(l Company:v. that. Purex was offering a deal of one free with one which he would han to meet (R. 256;" 2657). According to Netherson, he sold this customer six truckloads of 80- ",Vite bleach and gave him six free but never got any further orders.

Aside from the fact that Netherson s testimony does not c1emonst.rate any inability to cOlnpete with Purcx, but simply that the CUi'tamer did not see fit to purc.hase any furthe.r merchandise from N ethcl'son, his testimony regarding this incident is so thorough11ly confllse, evasiye and contradictory as to reflect unfavorably on his reliab:i1ity as fL witness. After testifying 'with considerable, certainty that thp, Mayfield buyer told him about a Purex one free with one deal, which _ PL'REX CORP. LTD. 159 100 Findings he would have to meet, and reiterating this testimony on cross-examination with the amplification that the buyer told him "Purex had one deal after another" (R. 2659), Xetherson "as asked by respondent's counsel whether he would regard as false a statement made bv the 1\Iayfield Company that: " ex Company has not offered us ;' free deal of one case free with one case in the years 1049, 1050 , 1951 , 195:2 1953, to date * * *". After a series of evasive and contradictory answers in which he stated that "I could be mistaken" regarding the one free with one deal at J\fayficld (R 2662), that "I don t know whether the deal \vas being offered, that to the best of my knowledge the buyer told him about it (R 2663), that "I may not have been meering one free with one as far as the l\Jayfield Company * *- * but it was a general condition aD oyer the State of Texas " (R. 26GG), that the .:Iayfield buyer "might" have mentioned it, that the buyer "probably" mentioned it but that hc (NethersoJl) ,,'ouJdn t say tiw.:Inytielcl statement read by counsel "as hlse (R. 2667), Xetherson finally conceded that probably the buyer didn t mention any Pm'ex deal at all hut that he (Netherson) having heard about the deal elsewhere oHered Jiayfielcl a one free with one deal himself wit.hout a.anything being said about Purex (R. 2669). 11ow8"e1', on redirect examination, after con iclel'able proc1(ling and Jeficling by (,()l1n pl snppo:ting the complaint Netherson once flgflill asserted that :Mayficlcl told him about the Purex deal (R. 2816-2818).

Aside from the fact that the above testimony demonstrates )J eitherson s complete lack of candor, if not his total lack of reliability as a witness, no finding of injury to competition in the Enst Texas area can be made because there is no evidence of any Purcx one -free with one deal in this a.rea, other than Netherson s hearsay testimony as to what a Mayfield buyer might have told him. The only reliable evidence of PU1'8X deals in the Tyler territory is the exhibit previously re.ferred to, which purports to cover all deals in this area from 1940 to 1950 (eX 57). This not only shows that there was no one free with one deal in 1050, but that there was no deal of any kind during uly of 1950 when, according to Netherson (R. 2657), this incident occurrerl.

c. Fm't Worth, Texas K ethel'on testified that around the end of :\farch 1950 C. C. Braggans buyer for ",Va,pies-Platter Company, one of his customers in Fort Cflse,V art h, advised him that Purex was offering a deal of one fre,e 33 The onj;- deals listed'cl in 1950 are:

Jan. :12-l\-Tarch :18-- 1 frer witlt 0 laJ' I-June 17-- I5c Ilfr ca e off face value of invoice 42.':7R C:- 160 FEDERAL TRADE COMMISSI02\T DECISIOKS Findings 51 F. T. C.

with nine in that market, and requested Xetherson to meet it with a deal of one free case with ten on the private-label bleach which :\etherson was then selling to iVaples-Platter under the latter s label. According to 1' etherson, he acceded to this request and "Waples-Platter bought so much bleach that he ",vas unable to make any further sales for about six months. Nctherson also testified re,garc1ing another incident in July 1952, in which Braggans allegedly requested him to lower his price for private-label bleach because Purex had made an offer to sell them private-label bleach at a lower price (R 25D8-2601). ivith respect to the first incident testified to by Netherson, the record is lacking in reliable evidence that Purex had any deal in this area in :Iarch or April 1950. Netherson s hearsay testimony as to what Braggans told him is of no value in this regard. The only reliable evidence in the record of any Purex deals during 1950 in the Dallas territory (of which Fort iVorth is part) coyers the period from .Tuly , 1D50 , to April 1D, 1D51 , and shows that Purex had no deals in this territory during that period (CX 2D-A). Although there was a 1deal in all the territories of the Dallas Division during April and :Hay 1D4D (CX 27-E and 27-H), this deal was discontinued in the Dallas territory itself in June 1D4D (CX 27-J), and there is no evidence of it being continued in the other territories of the Division after June 1949. :Moreover, Xctherson s testimony regarding this incident is lacking in inherent probability. At the time in question Purex bleach was sellng at $1.70 per case for the quart size (eX 4) and, with the alleged 1-9 de,d, its net price would be $1.53 per case. Yet Netherson s pri va te- label bleach was then selling for 81.05 per case (R 25D4) , or almost 50 cents per CMJC less tha.n Purex. It is therefore diffcult to understand how the alleged Purex deal could cause N etherson to reduce his price below 81.05. In the light of this witness' other testimony, some of which has already been referred to, the examiner cannot accept his uncorroborated hearsay testimony regarding this incident. Netherson s testimony with respect to the alleged incident of July 1952. is eq1lilly unconvincing ancl moreover, is irrelevant to this proceeding. etherson s testimony involves an aUeged offer by Purex to sel! private-label bleach to "Waples-Platter at a lower price. Even accepting Xetherson s hearsay testimony as to what the Purex quotation to "Waples-Platter was ($1.08 on quarts, 8UJ5 on half-gallons, and $1.07 on gaJloIls (R. 2GOO)) these figures were not lower than Netherson s price of $1.Q;j pel' case. J\Iore important, hO\fcvcr, the gravamen of the discrimination alleged in the complaint is the ollering of lower Pl:REX CORP. LTD. 161 JOO Findings prices, mostly by way of deals, on regular Purex bleach 34 whereas the incident in question does not involve any deal all Purex bleach, but the fllleged offering of a price on private-label bleach to be mmlufactllred by respondent for a particular wholesaler. The record in this case demonstrates that, almost without exception, Pllrex s competitors sell the.ir private-label bleach at a. substant.ially 100\'e1' price than their regular brand-label bleach.

d. Houston- So' th Texa,r area Xetherson sought to attribute to Purex competition the closing of his Houstou plant in November 1950, within a year after hc had acquired it. 1\ etherson testified that as a result of a Purcx 1-1 deal during the late Spring or Summer of ID50, his volume of sales in the Sonth Texas-Rio Grande Valley area served by the Houston plant uwindled until he finally had to close the plant and withdraw from that market. Insofar as Netherson s testimony pnrports to establish the Purex deal which he was allegedly meeting it is purely hearsay and no reliance can be placed thereon. Insorar as his testimony relates to alleged injury by Purex it is thoroughly confused, contradictory and l!llCOIlnnclng.

The basis of Xetherson s testimony that there was a Purex 1-1 deal in the Houston-South Texas area during the Spring or Summer or 1050 is hearsay information he allegedly received from customers and prospective cllstomers, and rrom newspaper advertisements. Insofar as customers are concerned, N etherson was unable or unwilling to name a single one who allegedly told him about. the Purex 1-1 deal, with the possible exception or one customer in Laredo, and on cross-examination he finally conceded that he didn t even recall whether this customer had told him about the Purex deal (R ::554, 2644, 2646, 2M7 651, 2774-2776). It may also be noted that after considerable testimony about a 1-1 deal, Ketherson suddenly began talking about a 1deal about which customers allegedly told him (R 2640). "With respect to newspaper advertisements, the record does contain advertisements from I-Iouston and San Antonio papers advertising Putex for sale at the retail level on the basis or one quart rree with the purdnlse of a quart., upon presentation of a coupon (CX 13- C, D). I-mnwer, all but one or these are advertisements of retail stores and not or the Purex Company. ,With respect to the one advertisement purporting to be a Purex advertisement, the record fails to show just hen\" the terms of this ofler applied to the jobber and retail customer. :J10re important, hmyever, there is no evidence of any actual sales to 3f See Purag-mph 'lwo of the Complaint which states that: "Unless otherwise specified subsel)l1ent references refer to respondent' s distribution and sale of Purex bleach, 162 FEDERAL TRADE COMMISSIOK DECISIONS Findings 51 F. T. C. customers by Purex pursuant to this offer. A mere offer to sell at different price,s does not constitute discrimination. There must be evidence of actual sales at such prices. Finally, it should be noted that, contrary to Netherson s hearsay testimony a.nd the advertise.ments upon ,yhieh counsel supporting the complaint relies, one of connsel'8 01\11 exhibits discloses that from July 1 , 1950 to April 19 1951 there 1\81'8 no deals by Pllrex in the I-Iouston t.erritory (CX29-A).

Aside from this 1\eakness in the evidence concerning the existence of a Pllex 1-1 deal, Kctherson s testimony as to how the alleged deal affected him was thoroughly confused and unconvincing. At fir he tes6fied that his volume of sa.les during ,January and February was "pretty good'\ but that it began to slow up in :March (R. 255G). He then testified that the Pm'ex deal did not start until :May or .June 1950, "Thich would thus seem t.o have no COll11cction with the decline in :Mareh. ,Vhcn asked what effect t.he deal which nl1evec11y began in iHay or tTune had on his sales volume, Xetherson testified that it had a "very depressing effect . But. wh n he "TflS flsked "how depressing the effect was, Ketherson replied: "M:y sales in .Tuly of HL::O were very much better than any previous month of that year" (R. 25(7). This. however, was followed by further testimony that. his volume of sales dropped from about 5 000 or 6 000 cases in .June to about 2 000 cases in .Tuly. According t.o Netherson his sales out of I-Iouston continuerl to decline for the bahnce of the year until he closed the plant in member of 1950. He produced no sales records: however, to bolster his unconvincing testimony.

Counsel supporting tile complaint places considerable reliance. on a profit-and-loss statement produced by Netherson, fib e.stablishing hi" claims of losses in the HOllston area.. This stat.ement shows a decline in net profits from approximately $35 000 in 1949 to approximately 000 in 1950. IIowever these figures have very limited probative value, since they cover all of Net.herson s operations in both the Dallas and Houston plants and include sales of laundry supplies laundry bleach, private-label bleach and So-Wite bmnd bleach (R 2587, 2809). Based on Netherson s estimate that. his busine3s ,,,as about equall:,divided among laundry supplies, laundry bleach, and household bleach, the latter would account for about one-third of his business. Since he further estimatecl that 90% of the household bleach was private-label and only 10% was So-vVitc (R. 2509), this would mean that the latter only rei\n sented about 3 percent. of his entire. blls1n(?$s BI See Austin Prire Discrimination finder RDbinsolJ-Patma)! Art r. 38, nn(l Ci1S+' ir+,d therein.

PL'REX CORP. LTD. 163 100 Findings In view of the fact that Netherson s alleged competitive difliculty with Purex in the South Texas area involved only So-vhite bleach, it seems apparent that a profit and loss statement covering all of his operations is hardly a reliable index of the trend of his sales of the product, \,which was a very minor factor in his business. Even a suming that So-"\Vite was a significant factor in N etherson 8 business, his gross sales for 1950 actually increased by $50 000 over 1949. iVhile it is true that the net profit was smaller, the increase in gross sales would seem to contradict Netherson s testimony that there was any marked decline in sales of So- vhite after .March 1950. Assuming, hmyever, that there was a decline in the sales of So-\Vite, the record affords no substantial basis for attributing this to Purex alone, or even in major measure. 1\ethel'. son conceded that Clorox was the biggest seller in the Houston area. ,Vhile he sought to 1ninimize IIilex s part as a competitor, the record shows an advertisement for Hilex in the :Houston market similar to the type of Purex ad which Netherson claimed had injured him (CX 13-B).

If the examiner were required to speculate as to the reasons for any -alleged decline in So-\Vite sales, the record contains evidence suggesting that Netherson himself may have been responsible for this C011- (1ition. Thus, according to his o\vn testimony, he became ill in July 1950 and ceased to engage in selling until December of that year (R. 2770-2771). Since he was the one primarily handling sales for his company (R. 11), this might have been a factor in his company alleged decline. Secondly, the record shows that "whereas the price of So-Wite bleach in thc early part of 1950 was $1.10 per case, with a deal of 1 free with 10 (R. 2623),'" resulting in a net price of $1. per case, he raised his price in the Summer of 1950 to $1. 35 a case (R. 2640). It is thus possible that this price rise was a factor in the sales resistance which allegedly occurred in .J uly 1950. In view of the absence of reliable evidence of any Purex 1-1 deal in the Houston- Southern Texas area during 1050 the confused state ()f the evidence concerning alleged injury, the lack of reliable evidence presence of as to etherson s operatlons in this territory, and the onsible forevidence sUCTO'cstino' that other ossible factors were res 00his troubles, there is no substantial basis for concluding that Purcx deals were a significant factor in the alleged decline of N etherson business in the Houston area.

c" Dallas territory As previously statBcl, N etherson bought the Dallns plant in J an- !I "The 1-10 deal was pnt into effect in February 1950 , prior to the time of any claim of diffculty with Purex.

164 FEDERAL TRADE CO:MMISSIO DECISIONS Findings 51 F. T. C. nary 1949 from the Hood Ch mical Company. The latter had purduced a brand-label bleach called "Thirty-Three . However, Nether- S011 did not llse this label, his household bleach operations prior to November 1949 being confined to pri""te-Iabel bleach. In the Spring of 1950, after he had acquired the SO-IYite label in the purchase of the Houston plant, Netherson endeavored to sell So-iYite in the Dallas !rea (E.. 2796), but, according to his testimony, he was unsuccessful except for one customer (R. 2562). However, his sales of privatelabel bleach have continued all at least the same level as when he. acquired the Dallas plant (R. 2(95). His main complaint appears to be that he has been unable to make more headway in the sale of the So-Wite bleach in the Dallas market.

Counsel supporting the complaint refers in his brief (p. 77) to five advertisements appearing in Dallas newspapers during 1951 anc119,32. as apparently being, in some way, responsible for )Yetherson s diffculties in Dallas. 'With one exception, all of these are ordinary advertisements of Pllrex bleaeh, having no connection with any deals. The one exception is an advertisement which offers the housewife a Carry-All Apron" if she will send in2G cents and a label from a bottle of Purex. If these advertisements pro\'e anything, the.y prove that one of the factors for Purex s success is an aggressive tclvertisillg policy, keeping its bleach in the public. eye. Even Xetherson did not seek to attribute to Purex an of the sins of his inability to make more progress in the Dallas market. _"\.after con('eding that he hadn t lost 8ny customers in Dallas, Nethersontestifiecl that the reason he wa able to get on the shelves in Dallas: was because they Tlere "clo\nled with other bleaches " referring to ';Hilex, Purex and Clorox: (Ii. 2821). An three bleaches are well-achertised products, and there is no reason to attribute to Purex or to Purex deals the responsibility for the sales resistance to 80- ,Vite bleach in the Dallas market. The reliable evidence in the record shm",s that l)urex deals in Dalbs between 19M) and 1951 were of a limited nature, both as to t.me and "mount (CX 27-E to - , and 29-A), and that So-,Vite s prices "ere substantially lower.

It)8 concluded and found that the record is lacl illg in substantial reliable and probative evidence of Hny subsiantial injury io the Charles H. X etherson Company from any Purex deals. 3. Air-ox bJeach This bleach was manufactured in 1-Io118ton for it period of less than a year beginning July 1948, by Air-ox Chemical Company, a partnership, of which one of the partners '"as Joseph Goldman. Goldman , , PUREX CORP. LTD. 165 100 Findings testified that he was unable to compete with PUl' , which he claimed was selling its bleach for $1.05 a case, net, whereas his own price was $1.35 a case for quarts and $1.20 for half-gallons (R. 1438). The record does not disclose the basis for Goldman s testimony regarding the price or Purex. There is no reliable evidence that Purex was being sold at that price between July 1948 and July 1949, the approximate period of Goldman s business operations in IIouston. There was at various intervals in 1948 and H)49 11 Purex deal of one free with nine in the Jlouston territory, but the dates or the inception and termination of the deal cannot be determined with any degree of accnracy (CXs 34- '\ 15-AI -FI -81 -Lla -NJ -Sla 27-E -II -J 55-E -H - Hmycver, this deal did not result in a net price of $1.05, but in a higher t price than that of Air-ox bJeach. The available evidenceror the Houston territory shows, for example, that the list price or Purex in April194 ) ,vas $1.65 per case, and the net price, after deducting for a 9 deal, was $1.48 (CX 27-E). The same preces were in direct in May 1949 (CX 27-H). In June 1949, there was no deal in the Houston territory (CX 27 - J).

Outside of his claim that he .was being undersold by Purex, Goldman altered no other reason for his inability to sell in the Houston market. He conceded, hO',"ever, on cross-examination, that it takes a year or I1me to develop public acceptance of a new bleach (It 1501) and that he was unable to develop any real voJumc. Actually he was in the nuti'ret only eight 01' nine months. There is no basis in the record for inferring that Golclman s inability to remain in the lloustoll market \Tas due to anything other than the normal competitive fnctors with which he 'Tas confronted by his prec1eces::ors in the market, including Clorox and I-Iilex as well as Pllrex.

The record as a whole is lacking in reliable, probative and substantial evidence of substantial injury to any competitor of Purex in the Texas market and surrounding areas or of any substantial injury to competition with Purex in this area. Conclusions as to primflry line injury Counsel supporting the. cOluplaint has produced an imposing mass of testimonial and docmnental'Y evidence in support of his claim of primary line injury. )leasured in terms of sheer bulk, such evidence gives an impl'cs::ive sud'ace appearance. IImvever, as is apparent from the foregoing discussion, the evidence, upon careful analysis prove,aled to be- in large part superficial, unreliable, unsubstantial and laeking in eS::cnbal probative qualities. The testimony of many of the key witlles es is based largely on unsupported hearsay, gossip and 166 :FEDERAL TRADE CO:innSSION DECISIOKS Findings 51 F. T. C.

surmise. Some of the witnesses demonstrated a. complete lack of reliability in their testimony. In certain vital respects there is a complete lack of essential evidence, such as that pertaining to the nature of Pure.x deals in certain areas and at certain times when witnesses testified they were allegedly injured by Purex. A large part of the documentary evidence (most of which was admitted by consent) serves no useful purpose in this proceeding, since it consists of evidence of deals in aTcas where there was no showing of the competitive situation or of possible injury to competition. The same is true of all documentary evidence pertaining to the product Trend. This overabundance of unnecessary documentary evidence is in contrast with the absence in many instances of records or other reliable documentary evidence to show the competitive position of allegedly injured competitors, other than by their guesswork testimony as to how much they sold, to whom they sold and to what extent their sales declined. On the present state of the record the examiner cannot conscientiously find that counsel supporting the complaint has established by l'e.liable, probative and substantial evidence that respondent's deals or alleged discriminatory prices have caused substantial injury to competition with respondent in any of the markets where counsel sought to show such injury 01', indeed, that there has even been a showing of substantial injury to any of respondent' s competitors as a result of any discrimination in price by respondent. To hold that counsel supporting the complaint has established a prima facie case of primary-line injury based on this record would impose upon respondent the burden of chasing a veritable will-o the-wisp in order to offer a defense to the nebulous evidence ouered against it.

In the brief filed by him, counsel supporting the complaint conteuds that a prima facie case of primary line injury has been established even without a showing of injury to any of respondents competitors. Counsel argues that since it is conceded that respondent has charged different prices to different customers (thereby establishing the discrimination in price) and since it is conceded that the bleach industry is highly competitive, this establishes a prima facie case of injury, under the authority of FTO v. 31 orton Salt Oompany, 334 U. S. 37; Moss v. FTO 148 F. 2d :178; and liTO v. Standmd Bmnds, Inc., 189 F. 2d 510.

It is true that the Act does not require a showing of actual injury to compe6tion since, under the language of the Act referring to discriminations the eiIect of v.rhich "may be" or "tend to" cause injury to competition, it is suffcient to show that there is a reasonable probability PUREX CORP. LTD. 167 100 Findings that there win be substantial injury to competition." However, the examiner does not interpret the cases cited by counsel supporting the complaint as holding that proof of a discrimination in price, plus the existence of competition, is suffcient to establish a prima facie case in a primary- line injury case.

Both the 11 cotton Salt and Standard Bmnds cases involved discriminations in price between competing purchasers. Under such circumstances, where there is a substantial difference in the prices charged to competing purchasers, it may be said that there is a reasonable, probability of the nonfavOlcc1 customers being injured. However, this result does not necessarily follow where the differences in price involve noncompeting customers. In such a CRse it is a complete non seqldtuT to say that because a manufacturer charges one price in :Minneapolis and a higher price in California, his competitors in fjnne.apolis may be injured. This would depend on the existence of a number of other factors, in addition to the c1ifl'ercnccs in price and the existence of competition. Before a presumption of injury can arise there must be sonle "rational connection bet.ween the fact proved (i. e. differences in prices charged to noncompeting customers plus the existence of competition ,,,ith respondents and the ultimate fact presumed fi. c., a reasonable probability of injury to the competitors of respondents * * * " 3 "\Yhile the 31088 case, also cited by counsel, does hrvolve primary-line injury, its holding that a presumption of injury arises merely upon a shmying of discrirnination in price extends beyond even the position here urged by c.ounsel, and as previously mentioned, is based on an erroneous construction of the Commission position as applied to the fa.cts in that case. In any event, whatever may lw.ve been the application of the lf orton Salt doctrine to this case had no effort been made by counsel to sho\V nctnal injury to competition, the showing made by counsel is such that it is no longer possible to conclude that there is a reasonable probability of injury to competition as a result of respondent's differences in price in different geographic areas. The proof of injury to competition which counsel supporting the complaint has offered not only fa.ils to establish such injury, but creates such uncerta.inty as to the competitive sitl1a6oll in the various areas as to render it impossible to 37 Corn Products Ref. Co. v. F. T. 0., 324 U. S. 726 , 738. Counsel snpporting the com- Morton Sau case as establishing the test ofrlnint refers to certain langUfig-c in the injury as one of "reasonable possibilty " rather than of "reasonable probability." How-ever. the fonner bas not been accepted b)" the Commission as the controllng test. S€! Memorandum of Commission by General Counsel, dated September 20, 1\)52, p. 7; Letter of August 4 , 1950, from CIHlirmlln of Commission to Chairman of Senate Committee on Interstate & Foreign Commerce, I:llSWer to question 9. :J Tat v. U. , 31D F. S. 463 , 467.

168 FEDERAL TRADE COMMISSION DECISIQXS Findings 51 P, T. C.

nm" conclude that there. is ally reasonable probability of injury resulting from rcspondenfs alleged1 discriminatory prices. It is accorcUngly concluded and found that there has not only been no showing of actual injury to competition ,,'jth respondent, but that there is no reliable, probative and substantial evidence that there is a reasonable probability of such injury resulting fronl respondents pricing practices.

V. Secondary line injury Although the efforts of counsel supporting the eol1plaint "WE're directed mninly at showing injury in the seller, or primary, line of commerce, he also introduced some evidence (mostly in the form of correspondence) purporting to show injury in the custo1ler, or secondary, line. This evidence involves, for the most part, whole8n10 customers of respondent located along the fringes of respondent' territorial divisions who received the benefit of one of rcspondenfs deals in their territ.ory, and allegedly sold in the adjacent territory in competition with wholesalers located in such adjacent territory \"here sllchdeal '''ns not in effect. The evidence upon which counsel relies is discllssed below, in connection with each of the territorial divisions where counsel claims there was injury to competition in the secondary line of c.011merce.

A. The Nm'th Dakotn-JlontlJ.na conflict Prior to about 1949 , the State of orth Ditkota was part of respondent' s jUinneapolis territory, and had the same deals and net prices as the latter territory. The State of ionbna ,,'as not part of this territory, and its net prices "ere higher than those which prevailed in North Dakota from the end of 1D48 through most of 1949, ,,-hen the :Minneapolis 1-2 deal was in euect. Counsel in support of thecollplaint sought to show that \\ho1esalers ill j)Iontana were placed at a competitive disadvantage because of the fact that wholesalers in the western part of North Dakota, who had purchased Purex at the l\finnea.polis-deal price, were selling it in eastern l\Iontana in competition ,with ::fontana wholesalers, who had purchased t.their bleaeh at non-deal prices.

In support of this contention, counsel cites a letter dated Dec.member , 1948 , written by a l\fontana. wholesaler, Ryan- Iavre Company, to respondent's broker in JHontana, complaining about the "cut-throat competition" resulting from the fact that the Gamble-Hobinson Company (hereinafter rei erred to as Gamble) of \Villiston, North Dakota was selling bleach in Montana at the lower Korth Dakota prices (CX g PUREX CORP. LTD. 169 100 Finding-s 36-1Y). This complaint was apparently forwarded to respondent' sales manager in the Pacific. Korthwest Division, who not only assured the Ryan-Havre Company that this situation ,,,auld be "cleaneclup in a hurry" (CX 36-X), but, by letter dated December 28 1948 , requested its' broker in the l)Iinneapolis territory not to " accept any more deal orders from Gamble at 1Villiston 30 in view of the fact tlmt the latter had failed to keep its promise (apparently made on prior occasions when there had been complaints) to refrain from selling in 1IontaIHl at orth Dakota deal prices (CX 36- Y).

It does not appear whether responclenfs broker immediately complied with the request that Gamble not receive the benefit of North Dakota deal prices in its purchases at 'VilJiston. Further corresponclence suggests that respondent eon6nned to sell to Gamble at the :North Dakota price after receiving a further promise that it would not sell in competition with :Montana vdlOlesalers at that price, but that this promise ,,,as broken. Thus a letter dated May 27 , 1949 written by rcsponden(s sales manager to its St. Louis divisional offce refers to the fact that, during a trip to l\Iinneapolis, the sales manager had. received Gamblc s "positive assurance the practice r of selling Purex in J\Iontana at deal pricesJ would be discontinued promptly and permanently, but that early that month the trouble had brokeu out again, and that the Ryan-Havre Company had expressed the intention of discontinuing Purex. The letter concludes with the statement that since Gamble "has gone back on their word the only thing we can do is to discontinue selling them * '" * ' :' and requests the St. Louis divisional offce to instruct respondent's :Millneapolis broker " to accept no additional business for shipment to Gamble at 1Villiston" (CX 37-Z3). Pursuant to this request, respondent's St. Louis offce, on June 1 , 1949 Tote to its broker in 1\linneapolis, in apparent confirmation of a telephone conversation had that clay, instructing him not to sell to Gamble at 'Villistoll " as we will not ship any Pm' ex from our St. Louis plant to these people" (eX 36-Z4). So 1'ar as appears from the record no further sales were made to Gamble at \Villiston on the basis of ilnncapoJis deal prices.

In his brief counsel supporting the complaint suggests that even as late as August 30, 1949, the Korth Dakota- Iontana. conflict had not yet been resolved. He relies in this connection on a letter of that date written to respondent by its Iinneapolis broker, in which, after re ferring to the problem that had been created "by certain orth Dakota rile Gamble-Robinson Company bad branches in other parts of the State of Xorth Dakota, The problem which had ilrisen invotYed only its branch at Wiliston, Xortll Dakoja, Findings 51 F.

distributors shipping Purex into Montana " the broker suggested that the respondent give "reconsideration (taJ extending the territory into which we can offer and ship the prevailing deal on Purex to include Bismarck, Dickinson and Minot (North Dakota J" (CX 3G-Z5). Counsel supporting the complaint interprets this correspondence as indicating that respondent had not yet solve,) the conflict which had existed because of certain wholesalers in the western pflrt of Xorth Dakota selling in 1\Iontana. The examiner does not so interpret this correspondence. Apparent.y, as a result of the situation created by Gamble at iViIIiston, respondent not only withdrew its JfinneapoJis deal from this wholesaler, but also detached the entire western half of North Dakota from the Iinnea.polis territory, and inc.uc1ed it in the JIontana territory (R 1756-1760, 17G6-1770; CXs 35- , 101). This apparently gave rise to objections from sever1l1 North Dakota jobbers located in Bismarck, Dickinson an(l :Minot (,yhic.h are not as far ,vest as \Villiston) who, so far fls appears from t.he record bad not been involved in Rny competitive problems wit.h Iontana frms. Respondents broker had apparently suggested on a previous occasion that the newly-drawn Korth Da.kota, line be, modified so as to include the above three towns within t.he finneapolis territory, bnt respondent had evidently refused to comply "with this sngg€'stion. This request vms renewed in the letter of Augnst 30, ID4D and again turned dO\Yll by respondent. HOl\ever in October ID4D it apparently reconsidered its previous decision, and made the lHinneapolis deals available in the above three communities, after receiving signerl letters from each of the font \Tholesalers located in these communities that they would confine the then current :.Uinneapolis deal to the State of Korth Dakota (CX 36-Z7 to -Z12). So far as appears from the record, this modificat.ion was not extended io Gamble at \Villjston, which hld broken its previous commitments to confine the deal to the St J.te of North Dakota (R. 1772) In his brief, counsel sllpporting the ('ompInint also suggests chat the detaching of western North Dakota from the ::Uinne,apolis territorycreated new competitive problems be.t\\'E'en "holesnlrfs in estern flnd eastern North Dakota. However, the testimony of responch::nfs j)finneapolis broker, upon "which counsel relies in making this contention, does not. support any such concJusjoll. \Vbile the bruker testified that it "could lwve been possible:' that there was somf' competition bet"een \whole.salers in the two parts of orlh Dakota, he was unable to recall any such iustanees (E. 17(-2 1775). :.Ioreover his testimony suggests that because of t11€ sparsity of the population PUREX CORP. LTD. 171 JOO Findings and the vastness or the area, any competition between the two areas would be on a minimal basis (n. 1770).

Counsel supporting the complaint also refers, in his brief, to the testimony of a representative or respondent's wholesale customer Nash-Finch Company, as establishing that the new territorial line dividing J\ orth Dakot.a caused some injury to compe6tion. The examiner does not so interpret the testimony of the ash Finch witness. The witness merely testified that there might have been some overlap between the branches of its own firm located in eastern and western North Dakota, anel that, in a tOlfn or t,YO, the company may have given the retailer the benefit of the lower eastern North Dakota prices, although the merchandise had been pl1rchase.l at the higher western North Dakota price (R. 1537). However, this does not establish any injury to competition between different customers of respondent as a result of one getting the deal and the other not getting it, but merely demonstra.tes some internal maneuvering of the Xash-Finch Company. The evidence with respect to this area clemonstrates that respondent made every effort to prevent any injury to competition between its orth Dakota and l\lontana territories. '\Vhen one of its customers failed to honor his promise to coniine the North Dakota deal to that state, respondent took the drastic action of refusing to sen to that customer at the North Dakota deal prices. In order to insure that there would be no recurrence of the situation, respondent detached the western part of North Dakota from the :\Iinneapolis tel'itory. Although it subsequently modified this territorial change to meet the objections of several customers, it did so only after it had received written assurance from these customers that they would not sell merchandise beyond the limits of the State of North DakoUl at the deal prices. There is no evidence in the record that these written assur- (l,needs were ever violated. The, problem created in the North Dakota- Montana area appears to have been a limited one, and was handled by respondent in an expeditions and, on the whole, reasonable and effeetivdashion.

B. Thelowa-i1issouriconflict Somewhat similar to the Korth Dakota- :M::ontana situation is th involving several firms located along the Iowa- Iissouri State Jines. During" 1949 res ondent had a deal of one free case with two in its I)es :Moines, Iowa, territory, and a, Less advantageous deal of approximately 24 cents off per case in the Kansas City tel'itory. Three wholesalers Jocated in the Des :Moines territory were apparently selling over in ::1missouri in competition with two wholesalers located in St Joseph fjssouri, and the Jatter compJnincd to respondent. On tTnly 26, 1949 ,, , , 172 FEDERAL TRADE CO:\'LvIISSlOX DECISIOKS Findings :;1 F. T. C. respondent' s Bt. Louis divisional offce "Tole to its DrokeI' in Des 1oines, advising him that it had received a complaint from the t\VQ "\"VholesalcTs in St. Joseph to the effect that the three 10\\"a firms were allowing the one-free-with- t\yo Purex deal to be sold outside the boundaries designated by us . The letter l' equests the broker to take steps " to control the deal, otherwise it will be necessary for us to take the same action in your territory as we did in Drill Dakota, viz. \,withdraw the one-free- ith- t\yo deal" (CX 35-K). This letter brought a prompt response from respondents broker in Des 1\1:oine8 "ho advised respondent by letter related July 28, ID49 , that these ac- C'ountshad already been contacted t,,;- or three weeks previously by a l'cpreselJtatlYc in the broker s Kansas City oflice who had advised them of recent complaints, and that they hnd assllred the broker they "\ oulc1 only sell Purex in ::1i5sou1'l on the basis of the cost in the State of lIissouri (CX 35-11). This letter ,,IS followed on August L 1949 by another letter from an oHicial of respondenes broker in Des :Moines advising respondent that he had talked to the salesmen who covered the t.three jobbers in question, and that "they L the salesmen J had already gone to each of them and1aid d01\ll the Ia1\ about selling in Missouri" Thc Jetler closed with the assurance that the broker had been "definitely promised complete cooperation by the parties concerned and \fe do not expect additional difficulty" (CX 35-N). So f,ll' as appears from the record, there were', no further complaints about lmya wholesalers :Jelling in Jissouri at the lawn, dea.l price. In his brief, counsel supporting the complaint refers to another an aclmisletter from respondent which counsel contends constitute,s sian that respondent still continued to experience diffculty in controlling this situation. This Jetter, \rhich counsell'refers to as " the letter of A_august 31sf (Ans\\"ering Brief, p. 103) and fLpparentl:y regards as :Jueceeding the letter of August 1, 1948, referred to above (CX 35ppecedinq the above corre-is actually dated Augnst 31, 1948, a year spondence. 'rile August ;)lst letter has nothing to do with the iowa- :Missouri situat.ion, but iuyolves a purported conflict between the Des JHoines: IOIYfl, and Omaha, K ebraska., territories (discussed next), ,which counsel evidently regards as having some connection with the iowa-Missouri situation.

C. The OT/1Clha-Des 1110hws confl-ict \. number of counties in the southwestern part of the State of Iowa adj accnt to Omaha, I\"ere pflrt of respondent' s Omaha territory)' and, as such, l'E'cE'jvecl the sanw deals as those in effect in Omaha. During ID4D "\\"hen responclenfs Des :Moines territory had a more aclYilltngeous deal PlJREX CORP. LTD. 173 100 Findings or one free with b1o, a wholesaler in southwestern Imnl apparently complained to respondents St. Louis offce about hnJ "holesa.lers in the adjacent Des Ioines territory coming into his territory with the 2 deal, and he requested that he too be given that deal. A letter from respondent's St. Louis divisional offee to its broker in Des 1-10ines dated August 9, 1949, refers to the fact that the writer had talked to the wholesaler on the telephone that day and had informed him ,youlc1 be impossible to gi,e hinl the deal. The letter closes "ith the suggestion that:

'" * '" wboever calls all tile Townsend 1Vholcsale Grocery Company fIocated in Slwnandoab, Iowa) give tllese peovle assural1ce that we will lio all in our po\ycr to l;:eep the one-free-with-two deal out of their territory (CX 33-0). The record does not disclose any further repercussions from this incident.

In his brier, counsel supporting the complaint rerers to the "August 31st" letter (CX 35 G), previously mentioned, as apparently being related to this situation also, and as indicating continued diffculty in the handling or the problem. As previously mentioned, the August 31st letter ,vas written in and preceded the above correspondence by a year. The August 31st letter (written by respondent to its broker in Des :Moines) indicates that because wholesalers in several towns in soutlHvestern Iowa had been selling the current Des :Moines territory deal in Omaha territory, the deal ,,"auld be withdrawn from them, and they would, in the rupture, be considered as part or the Omaha territory. This apparently resulted in southwestern Iowa being detac.hcd from the Des Moines territory and made part 01' the Omaha territory. The 1949 correspondence (CX 35-0) apparently represents an effort by one of the jobbe.rs in this territory to get respondent once again to place this part or Iowa in the Des )Joines territory, but respondent declined to comply, presumably because it did not ,yish to get into the conflict which had previously existed with Omaha. As previously mentionerJ , the record does not reflect any further confliet, after the letter of August 9, 1949, between southwestern Iowa (which had become part or the Omaha te.rritory in 1948) a,l1cl the Des :Moines, IO\ya territory.

D. The Nebmska-Oolomrlo conflict During 1949, while there WflS a deal in responden(s Omaha braska, territory, one of responclenfs 3o-called specialty salesmen took an order from a. retailer located in "' estern Xebraska at a price reflecting the current Omaha deal. The retailer apPill'ently clesignfltecl a 'I"holeso:ler in eastern Colorado (Denvel' territory) as the finn through , 174 FEDERAL TRADE COMMISSION DECISIOXS indings 51 F.

whom the sale would be biled, and who would receive credit for the sale. The wholes tier advised respondent's broker in Denver that could not fill the order because the price which respondent's salesman had quoted to the retailer was lower than the price at which he had purchased the bleach in the Denver (non-deal) territory (CX 37- 16), and the broker, in turn, called the matter to respondent's attention (CX 37- 14). Respondent, by letter dated September 9 , 1949 advised the wholesaler that the deal which had been offered to the retailer was only being offered in the Nebraska territory, and was not available through Colorado jobbers (CX 37- 17). A similar letter was sent to the retailer (CX 37- 18). In his brief, counsel supporting the compla.int interprets respondents letter to the jobber as being an admission that the situation Iyas typical of a number of others which had occurred in the past. Counsel quotes respondent as having stated in the letter, that this situation was " one of the very same cases where the Nebraska territory conflicted with the Colorado tenitory" Howeyer, an examination of the letter discloses that respondent did not refer to this as being " one of the very same cases':' but as " one of the very rate cases:' where Nebraska and Colorado territories conflicted and the letter further states that respondent ""il take e,ery step to see that this does not happen in the future The incident related above, involving the Colorado wholesaler who was unable to fill the order sold to the Nebraska retailer at the Nebraska deal price, is the only instance cited by counsel which in any way suggests a conflict between the K ebraska and Colorado territories. In his brief, counsel refers to another Jetter, alleged to have been written a "few days later " as apparently indicating some further diffeulty between these two areas. The letter, which is dated April , 1950, seven months subsequent to the letter of September 9, 1949 referred to above, has nothing to do with the above situation, but involves the payment of a bonus to jobbel's salesmen in Denver. Repondent, at various times, paid sa1esrnen employed by its ,,-wholesale customers a bonus of 10 cents per case in return for their efforts in pushing the sales of Purex bleach. So far as appears from the record this money was paid to the salesman, and did not inure to the benefit of his employer. The letter of April 13 , 1950 , from respondent' broker in Denver 'to respondent's home offce, refers to the fact that certain firms in Denver had not received the benefit of the salesmen bonus, to wit ;\Iil1er, Safeway, lands Colorado \Yholesale" (CX :W- 35). In response, respondellt advised the broker that the bonus wa.s for "jobber salesmen only, that the three firms in question were not entitled to it since they did not employ salesmen, that it would be , PUREX CORP. LTD. 175 100 Findings a violation of law for them to accept it (they evidently being chain retailers), and that Safeway had even indicated that it ,,' ould not accept the salesmen s allowance (CX 37- 36). Since this proceeding does not involve any charge of violation of Section 2 (c) or (d) 'Jf the Act, or any charge that the salesmen s bonus was a hidden price cut in violation of Section 2 (a), the hearing examiner does not understand what possiblc relevancy this incident has in this proceeding.

E. The Oolomdo-New Mexico conflict Counsel supporting the complaint relies on a lettter written by respondent' s divisional manager in Dallas to its broker in Albuquerque New i\lexico, as indicating fl conflict between wholesalers on both sides of the Colorado-New Mexico line (CX 34-D3). This letter, which is related April 28, 1949 , adviscs the broker in cw Mcxico that as part of its opening of the Colorado market the respondent was "putting on a hot deal in Colorado " and continues as follows: We realize this Pllts you on the spot will1 your northern l:\Tew l\IexicoJ jobbers. We are sending Mr. SJJurp (respondent's sales managed a copy of this letter and if anything can be done about the Colorado jobbers bringing tlle deal into your territory, it wil be done. However, it is dOlllJtful '..bether this can be controlled very well.

The letter contains a postscript from the divisional manager, addressed to respondent s sales manager, advising him that the Xelv Mexico broker had told him that quite a few of the jobbers in Albuquerque territory \were going to discontinue Pm' ex. If there is anything you can do on this, ,ve would apprecia e it." The record does not. disclose Ivhat the so-calleel "hot deaf' in Colorado was, although it does appear that the Albuquerque territory then had its O\Yll deal of one free with nine. There is no other correspondence in the record relating to this situation, and no testimony by any Kew lUcxico wholesalm' s as t.o the extent of the injury to competition, if any, resulting from the activity of Colorado jobbers. So far as appears from the record this was a temporary situation resulting from the opening of the Colorado territory.

F. Pem' ia-DwvenpoJ't conflict Counsel snpporting the cOHlplaint refers in his brief to it conflict vrhich aUegedly arose in the Peoria-Dan nport territories with respect to tbe sale of responclenfs detergent product, Trend. _The C()1TCsponclence on which connse11'8lie5 consjsts of a letter dated \rareh :2;3 1048, written by respondent to its broker in Davenport., IOlya, in which 423783-38- , .

Findings 51 F. T. C.

reference is made to an introductory offer of one free case with one which was being offered to retailers in Peoria, some of the orders for which were \nitten through Davenport jobbers (CX 35 B). It is diffcult to follow counsel's argument as to how this resulted in any price discrimination as between Peoria and Davenport jobbers. Counsel apparently contends that there is some inconsistcncy between the action taken in this situation and that discussed above, where. a :Kebraska wholesaler had originally been designated to receive credit for the order placed with one of respondent's salesmen by a Colorado retailer. However, the examiner fails to see any connection between the two situations, or hO\v there was any price discrimination involved in the Peoria-Davenport correspondence. The record discloses that at the time the letter of :\farch 23, 1948, was written, the net price of Trend, including deals, was identical in both the Peoria and Daven. port tel'itories, to wit, $3.50 per case (CX 3 West Central Division). Since the price in both territ.aries was identical, the only problem involved appears to have been one of which jobbers would receive credit for the sales made by respondent' s specialty salesmen. This has nothing to do ,with possible injury to competition resulting froln price differences.

C ondu8ion as to S econda'J'Y Line 1 njwi'Y Considering the many territories in which repondcnt operated and the vast nmnber of transactions involved, the instances cited by counsel in which there was any conflict between wholesalers in adjacent territories as a result of one getting a deal and another not receiving it were amazingly few. In ahnost each instance respondent acted with reasona.ble dispatch in seeking to insure that the wholesalers in one territory would not have a competitive advantage over those in an adjacent territory. '\Vhere jts enorts to secure voluntary compliance failed, it took such drastic action as declining to sell to certain wholesalers who failed to keep the deals within prescribed territorial limits and also redrew some of its territorial lines to prevent a recurrence of the conflict. The instances cited where respondent was unable fully to resolve these conflicts are so few and so minor that it cannot be said that they reeulted in any substantial injury to competition, or that there exists a reasonable probability that injury to competition in the secondary line will occur.

'Vhile the circumsta,nccs involved are not identical, the rationale expressed in the Commission s memorandum of October 12, 1948 stating its policy toward geographic pricing practices, appears to be particularly appropriate here. Thus, t.he Commission states: ;

PUREX CORP. LTD. 177 100 Ord However, there are strong reasons why the concept of injury adopted by tbe court in the Morton Salt case should not be applied automatically to discriminations arising umler georgraphic pricing systems in \vbich purchasers paying different prices are differently located and the price tlifferences generally diminish as the distances diminish between purchasers' locations. In these circumstances cornpetit.ion between pU1-chase?' s payi.ng significantly different prices may occur in qllite limited. areas or only along the 1r.inges of t1' ude territories. Seeming advantages in price may be materially affected by disadvantages of location. These and other considerations make it dear that in geographical price discriminations inferences of injury to competition drawn pnrely from the existence of price differences between purchasers 'who compete in some degree would have no sound basis. 'l' he minimum determination of injury should be based upon ascertained facts that afford substamtial probability that the discriminations, if continued, tdll n s1llt in inju?y to competition (Italics supplied). (Statement of Commission s Poliry Toward Geographic Pricing Practices, October 12, 1948, 8).

Although, as previously mentioned in connection with thc discussion of primary-line injury, the circumstances giving rise to the Commission s statement of policy are not entirely analogous with those involved in respondent's territorial pricing system, the logic of that statement of policy has application to the factual situation here, insofar as there is involved limited competition along the fringes of trade territories and an absence of substantial evidence of injury to competition or the substantial probability that respondent's practices win result in injury to competition in the secondary line. COXCLUSION OF LAW It is concluded that counsel in support of the complaint has failed to stablish by reliable, probative and substantial evidence that respondmt has engaged in unlawful discriminations in price in violation of 3ection (a) of the Clayton Act, as amended by the Robinson-Patman , approved June 1U , 1U36 (U. S. C. Title 15, Section 13). The notion of respondent to dismiss the complaint herein, on the ground hat no violation of said Act has been established and that no basis has should)een shmnl upon which to issue a cease and desist order, accordingly, be granted.

ORDER It O1'dered that the complaint herein be, and the same hereby is lismissed.

&, 178 FEDERAL TRADE COMMISSION DECISIOKS Decision 51 F. T. C.