Lafayette Foods, Inc.

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IN THE :MATTER OF LAFAYETTE FOODS, I 'CO:SBENT OUDER IX REGARD TO THE ALLEGED nOLATlOX OF 617B81'0. (C) OF THE CL.1.YTON ACT AS A::fEXDED Docket 6223. Complaint, June 195- Decision, Oct. , 1.95' Consent order requiring a wholesaler of food products in Lafayette, Ind., to cease accepting from sellers brokerage fees on purchases of frozen foods or other commodities for its own account or while acting as an intermediary for a buyer or subject to the buyer s control.

Before Mr. J. Ea'Jl Cox hearing examiner. Mr. Edward S. Ragsdale and Mr. Cecil G. Miles for the Commission. Stuart, Devol, Branigin Ricks of Lafayette, Ind. , and Winston Stmwn, Black Town of Chicago, Ill., for respondent. Cm,Irl \INT The Federal Trade Commission, having reason to believe that the party respondent named in the caption hereof and hereinafter more particularly designated and described, has violated, and is now violating, the provisions of subsection (c) of Section 2 of the Clayton Act (D. S. C. Title 15, Sec. 13), as amended by the Robinson-Patman Act approved June 1\), 1\)36, hereby issues its complaint stating its charges with respect thereto as follows:

PARA.GHAPU 1. Respondent Lafayette Foods, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Indiana, with its prinicipal offce and place of business located at Concord Road, Lafayette, Indiana. Respondent maintains branch offces at Chicago, Illinois, St. Louis, Missouri, and Indianapolis, Indiana.

PAR. 2. Respondent is a wholesaler of food products, who since October of 1045 has engaged in the purchase and sale of frozen foods juices and canned goods, purchasing and selling substantial quantities of various types and varieties of frozen foods, j uiccs and canned goods, including frozen vegetables, frozen fruits, frozen juices, frozen poultry, frozen fish, frozen meats, and some canned foods (all of which arc hereinafter referred to as frozen foods) . Responde,nt in c01l1ection with its business also operates a wholly owned subsidiary, Continental Freezers, Inc., located at Lafayette Indiana, which warehouses respondent's frozen foods. LAFAYET' TE :FOODS, INC. 425 424 Complaint Respondent is a, substantial ractor in the purchase and sale or rrozen roods, operating a large number or rerrigerated trucks used in selling such products to large grocery chains, many independent grocery stores, institutions, and other buyers. PAR. 3. In the course and conduct of its business, since incorporation in October of 1945, and more particularly since January 1, 1950 respondent Lafayette Foods, Inc., has engaged, and is now engaged in commerce, as "commerce" is defined in the amended Clayton Act purchasing frozen roods from sellers with places or business located in many states or the l7nitecl Sta,tes and causing such products to be transported from such places of business to respondent's places of business located in other states of the United States. -\R. 4. Respondent Lafayette Foods, Inc., in the course and conduct of its business or buying food products for its own account in commerce as aroresaid, since October or 1045, and more particularly since J annary 1, 1050, has been and is nmv receiving and accepting from sellers, commissions, brokerages rees, or other compensation, or allowances or discounts in heu thereor on purchases or frozen foods for its own account. As illustrative of the practices pursued by the Tespondent in receiving and accepting, directly or indirectly, commis- Sible, brokerages fees or other compensation, or allowances or disconnts in lieu thereof from interstate sellers are the following: Respondent has purchased substantial quantities of frozen foods from Sodus Fruit Exchange of Sodus, :Michigan, since 1045. Respondent since Tanuary 1, 1950, has received and accepted a 3 percent .discount or commission on snc.h purchases of this seller s products which is the customary rate of brokerage the seller paid its brokers for selling such rrozcn foods. R.respondent is the only customer of this seven purchasing direct (that is, ,vithout the intervention of a broker), and is likewise the only customer receh-ing the 3 percent discount. Respondent in March of 1953 purchased a substantial quantity of frozen concentrate orange juice from Fruit Industries, Brandenton Florida. This specific. sale was negotiated by Illinois Central Sale Inc. of Chicago, Illinois, a brokerage firm representing the seller. The brokerago finn for its services in negotiating and selling the product received a 3 percent brokerage fee.

Respondent, how eyer, thereafter had an understanding ,with this seller that it could make further purchases direct (that is, without the intervention of a broker) and that on such direct sales the 3 perc.ent brokerage fee would be granted respondents on its purchases. Respondent subsequently purchased fruit juices from this seller and 426 FEDERAL TRADE CO vrISSION DECISIONS Decision 51 F. T. C.

has received the 3 percent brokerage fee formerly granted by the seller to its broker.

PAR. 5. The aforesaid acts and practices of respondent since .T anuary 1, 1950, in receiving and accepting directly or indirectly, commissions, brokerage, or other compensation, or allmvances or disc-aunts in lieu thereof on purchases of frozen foods in commerce, as set forth above, arc in violation of subsection (c) of Section 2 of the Clayton Act. as amended by t.he Robinson-Pat.man Act. DECISION OF THE CO::DIISSIOX Pursuant to R.ule XXII of the Commi3sion s Rules of Practice, and as set forth in the Commission s "Decision of the Commission Order t.o File Report. of Compliance " dated October 28 , 1954, the initial decision in the insta,nt matter of hearing examiner J. Earl Cox, as set out as follows, became on that date the decision of the Commission.

DHTIAL DECISIO:!'r BY J. EAHL cox IIEAlUKG EXAlIrINER The complaint in this proceeding charges the respondent! fl corporat.ion, wit.h having violat.ed subsect.ion (c) of Sect.ion 2 of the Clayton Act, as amended, by receiving and accepting from sellers, commissions brokerage fees or other compensation, or allowances or discounts in lieu thereof, on purchases of frozen foods for its mvn account. After the issuance and service of the complaint and the filing of respondent' s answer thereto, a stipulation was e.entered into by respondent and counsel supporting the complaint, in Ivhieh the respondent. admits all t.ho jurisdictional "lJegat.ions set. fort.h in the comphlint and agrees that the order set forth in the stipulation shall have the sa,me force and effect as if made after a fun hearing, presentation of evidence and findings and conclusions thereon, and specifically waives any and all right, power or privilege to challenge or contest the validity of the order entered in accordance ,with the stipulation. Tho st.ipulabon also provides, among ot.her t.things, t.hat. all the parties request that the answer of the respondent be withdrawn, that they waive a hearing before a hearing examiner of the Commission the filing of ex- the making of findings of fact or conclusions of 1aw ceptions and oral argument before the Commission, and all further and other procedure before the hearing examiner and the Commission as to which respondent. may be entitled under t.he Clayt.on Act, amended, or the Rules of Practice of the Comlnission. All parties agree that tho stipulation, together with the complaint., shall const.itute the entire record herein; that the order hereinafter set forth may be LAFAYETTE FOODS , INC. 427 424 Decision entered in disposition of this proceeding wit.hout further notice; that the complaint herein may be used in construing the terms of said order which may be altered, modified or set aside in the manIler provi(le, by the statute for the orders of the Commission, and that the signing of the stipulation and consent by respondent to the entry of the aforesa.id order are for settlement purposes only and do not constitute an admission by respondent that it has violated the law as nl1eged in the complaint.

The stipulation is made a part of the record herein; the request that the answer of the respondent be \yithc1rawn is granted; this proceeding is Immc1 to be in the public interest; and, in eonfonnity \with the terms of the stipulation, the following order is issued: OHDEH It is ordered that respondent Lniayette Foods, Inc, a corporation its offcers, and its respective representatives, agents, or employees directly or indirectly, or through any corporatc or other device, in connection ,,'ith the purchase of frozen foods or other cOlnmoc1ities :in commerce as "commerce" is defined in the flfore.said Clayton Act, do forthwith cease and desist from:

Receiving or accepting, directly or indirectly, from any seller, anything of value ns a commissjon brokerage, or other compensation, 01' any allowance or discount in lieu thereof:, upon or in connection \vitl1 any purchase of frozen foods or other commodities made for ib 0\\'1 account, or \yhile acting -for or in behalf of a buyer as an intermediate agent, or subject to the direct or indirect. c )ltl'ol of such buyer!' ORDER TO FILE Import OF cCnrPLL\XCE It '/8 Oi'dei' ed that respondent Lafayette Foods, Inc., a corporatlon fileshall, within sixty (60) days after service upon it of this order, with the Commission a report in writing setting forth in detail the TWUller find form 111 which it has cOlnplied ,with the order to cease and desist fas require.d by said declaratory dec,ision and order of October :?8 );)":- OJ.