K. C. Snow Crop Distributors, Inc., et al.

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IN THE ::L-"TTER OF K. C. S OW CHOP DISTRIRGTORS, no., ET AL.

COXSEXT ORDER Ix REGARD TO Til; \.ALLEGED VIOLATION OF SIJBSEC. :2 (C) OP THE CLA Ylon ACT AS AJIENDED Docket 6210. Cornplaint, June 19S-4-Decision, Oct. , 195' Consent order requiring a Kansas City distributor of food products, chiefly frozen foods and frozen juices, to cease receiving from various sellers brokerage fees or commissions paid to its corporate brokerage agent on nurchases made for its own account.

fore illi' . John Le1V1:s hearing examiner. iJh. Edward S. Ragsdale and lift. Cecil G. l11ile8 for the Commis- SIOn.

Gage, Hillix 11 OOTe Park Jackson of Kansas City, Mo. for respondents.

COMPLANT The Federal Trade COl1mjssion having reason to believe that parties respondent named in the caption hereof, and hereinaftpr more particularly designated and described, have been and are now violating the provisions of subsection (c) of Section 2 of the Clayton Act (U. S. C. Title 15, Section 13), as amended by the Hobinson-Patman Act approved June 19, 1936, hereby issues its complaint, stating its charges "ith respect thereto as follows:

PARAGRAPH 1. Respondent Ie C. Snow Crop Distributors, Inc. hereinafter sometimes referred to as Snow Crop, is a corporation organized, existing and doing business under and by virtue of the la,,-s of the State of Missouri with its principal office and place of business located at 5th Street and ICaw Hiver, ICansas City, 3Iissouri. It was incorpomted on or about -"larch 7, 1947 , with G. iu'lon \Vilson as President and ,VendelJ R. Stopps as Secretary- Treasl1el' These two individuals have owned and controlled the majority of the stock issued and outstanding in the corporate respondent since it was incorporated. During this entire period said respondent has been and is now engaged in the business of buying, selling and distributing frozen foods, frozen juices and other food products: all of which are hereinafter sometimes referred to as food products. PAl'. 2. Respondent Stoops & ,Vilson Brokerage Company, hereinafter sometimes referred to as the brokerage company, is a corporation organized, existing and doing business under and by virtue of the K. C. SNOW CROP DISTRIBUTORS , J!C., ET AL. 413 412 Complaint laws of the State of Iissourj, with its principal offce and place of business located at 500 East Third Street, Kansas City, ~lissouri. It was organized and incorporated on or about J 1l1y 11 1D51 ,,,ith vYendel1 R. Stoops as President and G. Adon ,Vilson as Vice President. These two oHlcials have m\'wd since that date, and now OWll approximately 98% of an the capital stock issued and outstanding in corporate respondent. Respondent has been since the elate of its incorporation and is now engaged principally in the food brokerage business representing various principals in the sale of their food products, chiefly frozen foods and frozen fruit juices, hereinafter sometimes referred to as food products.

substantial part of respondent brokerage company s business however, is acting as buying agent in making purchases ror the corporate respondent Snow" Crop, on ,,,which purchases the brokerage company receives, on behaH or the incbvidualrespondents and corporate respondent Snmv Crop, brokerage fees or commissions from various sellers. It is this part of the respondent brokerage company's business that is being challenged by this complaint. PAR. 3. Respondent, G. Arlon \Vilson, is a major stockholder in corporate respondent Snow Crop and from the date of its incorporation in 1 , until January zn, 1953, was its President. In fact, he and respondent ,Yendell R. Stoops now own and control, and have since respondent Snmy Crop \yas organized owned and controlled, the majority of the issued and outstanding capital stock of this corporate respondent. Except for a short period, respondent Stoops was either Secretary or Secretary-Treasurer of respondent Snow Crop from the elate or its incorporation until September 1951 , at which time he withdrew from Snow Crop as an offcer and became active in the management or the brokerage company, but retained his stock.k ownership in respondent Snow Crop. Since Sno,;\' Crop was organized ,Vilson and Stoops have exercised and still exercise substantial if not complete authority.y and control over the bustness conducted by c;aid corporate respondent Snow Crop, including the direction of its purchase, sales and distribut.ion policy.ies. On January 26, 1953, Charles 'V. IIammon ,yas designated President of respondent Snow Crop bnt at the time or his designation or appointment and as late as J nne 1053, he O\yned not more than 10 shares of the issued and outstanding capital stock of subject corporation.

PAR. 4:. Respondent ,Vendell R. St.oops is President of corporate respondent Stoops & ,Vilson Brokerage Company, with respondent G. Arlon 'Vilson as Vice President. These two individual respondents 414 FEDERAL TRADE CO::L\I(SSION DECISIOKS Complaint 51 F. '1' , C. have held these offcial positions with the bl'okenlge company since it was organized in July 1951. These two individual respondents now own and control and have owned and cantra11ed approximately 980/0 of the issued and outstanding capital stock of the brokerage company since the date of its organization and incorporation. As offcers and majority stockholders of the brokerage company, respondents SVcnc1ell R.. Stoops and G. Adon ,VDsan nmy exercise and hayo exercised complete control and authority over the business conducted by the brokerage company, including its sales and distribut.ion policies, since the date of its incorporation. PAR. 5. The number of shares of capital stock issued and out:itanding by the two corporate respondents he.reinabove mentioned and the ownership of this stock by the individual respondents named herein are set out below:

K. C. Snow Crop Stoops & Wilson Distrilmtors, Inc. Brokerage Co.

Stock issued and outstanding_ 360 shares 455 shares owned by G. Arioll Wilson -- ----------------- 100 shares 225 shares \Vendell R. Stoops- - 100 sl1ares 225 shares The remaining 169 shares of capital stock issued and outstanding in respondent Snow' Crop are owned by nine other individuals and the remaining five shares in the respondent brokerage company arc owned by the Secretary of the company:r.

\ll, 6. In the course and conduct of the business of respondl Tlt Snow Crop since J\Jnl'ch 1847 , and the business of respondent brok.erage company since Septelnber 19,')1 , said individual respomlent.s through corporate respondents, and each of them, have continuously made purchases of food products from or sales of food products for various sellers or manllfactl1' cls whose plac.es of business \were locflted in seve.ral St.nies of t.he rnited States, other than the St.ate in \which said responde-nts are located. Said respondents, both individual and ('orporflte directly or indirectly, caused such lOOLl products, so pnrchased 01' sold, to be transporte.c1 from sairl State of origin to destinations in other States. There has been at all times ment.ioned herein a contimlOl1S course of trade ancl COlTlmere8\ ns ';('commerce is defined in t.he Clayton Act, in said food products, across State lines bct\yeen said inclividm:l respondents through corporate respondents: awl each of them, and the sellers of said food products. Said food products arc sr)ld awl distributed for llse consumption or resale \\"within various States of the l;nitecl States.

\H. 7. Since Septem1:wr lD51 sniel illdiyidual respoJlelents n. Ar- Ion ,YiLon and,Venc1pll H. St.oops, and ('orpor 1t:e respondent Snmy Crop hnye lTw(le substantial purchases from sellers through coj'- K. C. SNOW CROP DISTRIBUTORS, INC. , ET AL. 415 412 Decision porate respondent Stoops & \Vilson Brokerage Company, on whi purchases the various sellers granted or allowed said corporate respondent Stoops & "'\Tilson Brokerage Company a commission or brokerage fee. During the year 1952 the purchases made by corporate respondent Snow Crop through the corporate respondent Brokerage Company amounted to approximately$229 750.00 on which the sellers paid fL brokerage or commission to corporate respondent Brokerage Company in the amount of approximately $6 768.50. PAR. 8. The acts and practices of respondents, corporate and individual, and each of them, individually and collectively since September 1951, in receiving and accepting commissions, brokerage, or other compensation, allow.ances or discounts in lieu thereof on purchases or sales of food products in commerce, as above-alleged, arc in violation of subsection (c) of Section g of the Clayton Act as amended by the I obinson-Patman Act.

DECISION OF THE C01\I:'nssIOX Pursuant to Eule XXII of the Commission s Rules of Practice, and as set forth in the Commission s :;Decision of the Commission and Order to File Heport of Compliance " dated October 28, 1954, the initial decision in the instant matter of hearing examiner John Lewis as set out as follows became on that date the decision of the Com- 111Sslon.

INITIAL DECISION BY JOHN LE"\YlS, lll'\RIXG EX:UIIKEH The Federal Trade Commission issued its complaint against the above-named respondents on June 1 , 1954, charging them w"ith having violated Section 2 (c) of the Clayton Act, as mncnded by the Hobinson-Patman Act. Copies of said complaint were duly se.rved upon respondents who thereafter appeared by counsel and entered into tJULt re-a stipulation for consent order. Said stipulation provides spon(lents admit all the jurisdictional allegations of the complaint ancl vi'aive the requirement for issuance of a. decision containing findings of fact and conclusions of law, and further procedural steps before the hearin,g examiner and the Commission t.o which respondents nmy be entitled under the Clayton Act, ns amended or the Rules in said stipula-of Practice of the C0l11nission. R.espol1cltmt.s consent tion to the entry of an order to cease mid desist ill the farni therein provi(le(( for, with the same force and effect as if said order had been rn:1l1e after n fun hearing, presentation of eVlclenccj and findings an(1 conclusions thereon 1.nd ,,-aiye any HlHl an right, power or privilege to ehnl1eJlr e oj' contest the Yfdi(ht:v o-r said order. Said stipllln.tioll 423783-- 58- FEDERAL TRADE cO:\I:nSSION DECISIOKS Findings 51 F. 1'. C.

further provides that the signing thereof a.nd eonsent by respondents to the entry of tlJC aforcsaid order is for settlement purposes only and does not constitute an admission of any facts, other than those pertaining to jurisdiction, or that respondents have violated the law as alleged in the complaint.

The aforesaid stipulation for c.onsent order and a.n accompan:ving affdavit of respondent G. Ar10n ,Yilson having been submitted to the above-named hearing examiner, theretofore duly designated by the Commission, for appropriate action in accordance 'with Rule V of the Commission s Hnles of Practice, and it appearing to the hearing examiner that saiel stipulation affords the basis for an appropriate disposition of this proceeding, said stipulotion and accompanying affdavit are hereby accepted and ordered filed as part of the. record in this proceeding and, in accordance t11e1'e1\itll, t.he hearing examiner makes the follmying :

JUHISDICTIONAL FIXED!XGS PARAGRAPH 1. Respondent IC C. Sumy Crop Distributors, Inc., is a corporation organized under' and by virtue of the la\Vs of the State of Missouri with its offce and principal place of business located at 5th Street and I(aw Avenue, Kansas City, Kansas. Prior to June 8, 1D54 the individually'respondents G. Arlon . Wilson and ,Vcndcll R. Stoops were directors of, and owners of 211 shares of stock in, the corporate respondent, K. C. Snow Crop Distributors, Inc., on which date said individual respondents resigned as directors of the corporate respondent and sold their remaining shares of stock therein to certain employees of Baid corporation.

PAR. 2. Respondent Stoops & .Wilson Brokerage Company is a corporation organized under' and existing by virtue of the laws of the State of :Jlissouri with its offce and principal place of business located at 500 East Third Street, Kansas City, .Missouri. The individual respondents, G. Arlon '\Vilson and 'Vended R. Stoops, are now nnd "ere at all times mentioned in the complaint Vice- President and President respectively, of the respondent Stoops & ,Vilson Brokerage Company, with their principal offee located at the same address as said corporate respondent.

PAR. 3. In the course and conduct of the business of the corporate respondents, the individual respondents, through the corporate 1'espondents, and each of them, have continuously made purchases of food products from or sales of food products for various sellers or ma.nufacturers whose places of business "Were located in several States of the 17nitecl States, other than the State in which said respondents are 10- K. C. SNOW CROP DISTRIBUTORS , L'\C., ET AL. 417 412 Order cated. Said respondents, both indiyic1ual and corporate, directly or indirectly, caused such food products, so purchased or sold, to be transported from said State of origin to destinations in other States. There has been at all times mentioned in the complaint a cOlltinuous course of trade and commerce, as "commerce ' is defined in the Clayton Act in said food products, across State lines between said individual respondents through corporate respondents, and each of them, and the sellers of said food products. Said food products are sold and distributed for use, consumption or resale within yarions States of the 'United States.

ORDER It i8 o/'dered that the respondent, Stoops & -Wilson Brokerage Company, a corporation, its offcers, and the individual respondents 'V endell R. Stoops and G. Arlon Wilson, individually and as offcers of said Stoops & wilson Brokerage Company, and their respective representatives, agents, and employees, directly or indirectly, or through any corporate or other device in connection "\with the purchase of food produets in commerce, as "collmerce" is defined in the afores tid Clayton Act, do forthwith cease and desist from recei ving or aeeeptjng, directly 01' indirectly, from any seller, anything of value as a commission brokerage, or other compensation, or any allowance or discount in lieu thereof, upon any purchase of food products by or for the account of IL C. Snow Crop Distributors, Inc., where either of the respondents G. Adou 'Vilson or 'Vende1l R. Stoops, or both, are the agents, representatives or other intermediaries a.acting for, or in behalf of, or are subject to the direct or indirect control of the said K. C. Snow Crop Distributors, Inc., or ally other buyer.

It is t"ither ordered that the respondent, K. C. Snow Crop Distributors, Inc., a corporation, its offcers and the individual respondents, G. Arlon 1Vilson and 1Vende1l R. Stoops, individna1ly and as either offcers or majority stockholders of said corporation, and their respective representa.tjYBS, agents and employees, directly or through any corporate or other device, in connection with the purchase of food products in commerce, as ';commerce" is defined in the aforesaid Clayton Act, do forthwith cease and desist from receiving or accepting, directly or indirectly, from any sener anyt.hing of value as a commission, brokerage, or other compensation, or any allo,-vance or discount in lieu t.hereof, upon ally purc.hasp of food products b or for the account of K. C. Snow Crop Distributors, Inc., or where either of the respondents G. Arlon 1Vi180n or 1Vendell R. Stoops, or both, are the agcnts, representatives, or other intermcc1jaries acting Order 51 F. T. C.

for, or in behalf of, or are subject to the direct or indirect control of the said K. C. Snow Crop Distributors, Inc., or any other buyer. ORDER TO FILE REPORT 01' C01lPLIAKCE I t is ordered that the respondents herein shall within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist (as required by said declaratory decision and order of October 28 , 1D54 J. BRONCO MFG. CORP. ET AL. 419 Complaint