Clover Farm Stores Corp. et al.

52 F.T.C. 1140 · Docket 6444 · Decided Apr. 24, 1956 · Consent

Citation: 52 F.T.C. 1140
Docket: 6444
Decision: Apr. 24, 1956
Document type: Consent
Case type: Unclassified
Statutes: Clayton Act s2 / Robinson-Patman
Respondent counsel: Loeser, Keough Freedheim of Clevehnd, Ohio
Source: Original volume PDF
Original PDF: This decision as a PDF

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Clover Farm Stores Corp. et al., 52 F.T.C. 1140 (1956). Consumer Law Library, https://consumerlawlibrary.org/decisions/v052-0140s1

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business located at 2135 Columbus Road, Cleveland, Ohio. It is wholly owned and controlled by respondent Clover and hereinafter a reference to respondent Clover is to be interpreted as including respondent The Lane-Lease Co., Inc. Said respondent was incorporated in Ohio on November 16, 1940, although the business had been operated as a Delaware corporation under a somewhat similar name (The Lane-Lease Company) by substantially the same owners and along similar lines for many years prior to respondent's incorporation in Ohio.

PAR. 3. Each respondent named below is a corporation which is organized, existing, and doing business under and by virtue of the laws of the state specified, and whose principal office and place of business is located at the address shown, opposite its name: ...

Respondent | State of incorporation | Location of principal office and place of | | business ...

Said respondents are the wholesale grocery firms referred to in Paragraph One and are sometimes hereinafter referred to as respondent members.

PAR. 4. Respondent Clover is now, and continuously since its organization in 1947 has been, engaged in acts and practices which facilitate transactions or purchase and sale of food products, grocery products, grocers' supplies, and grocers' equipment between sellers of such products and respondent members who purchase such food and grocery products for resale to retail grocery stores and who purchase such supplies and equipment for their own use and for resale to retailers.

In most of such transactions the member respondents order directly from and are invoiced by the sellers; but in others the member respondents order from and are invoiced by respondent Clover which is invoiced by the sellers.

Said acts and practices of respondent Clover consist in part of making arrangements with the sellers to sell products under brands which are owned by respondent Clover; of designating such sellers as approved suppliers; of listing such sellers in a book supplied by respondent Clover to respondent members; and of urging respondent members to buy directly from such sellers. Respondent Clover engages in substantially similar acts and practices with respect to the same and other sellers as to products sold under brands owned by the sellers.

Most of the transactions are between sellers and respondent members located in different states; and most of the products involved in such transactions are shipped across state boundaries.

Par. 5. In engaging in the acts and practices above alleged respondent Clover is performing services commonly rendered by independent brokers which respondent Clover replaces in a large number of such transactions of purchase and sale. In consideration for such acts and practices, many of the sellers pay or grant to respondent Clover, and respondent Clover receives and accepts from such sellers, sums of money as brokerage and as allowances and discounts in lieu of brokerage. Prior to about 1953 such sums were typically a percentage of the purchases of respondent members. Subsequently many sellers, at the instance and request of respondent Clover, paid lump sums, the amounts of which were the same or approximately the same as theretofore paid on a percentage basis.

In some transactions where the seller invoices respondent Clover and it invoices respondent members, the payment takes the form of a discount which is in lieu of brokerage.

Par. 6. The funds received by respondent Clover as brokerage and as allowances and discounts in lieu thereof are used by it, together with other funds received by it from respondent members, to pay its operating expenses. When such funds exceed expenses in any year, the excess or part thereof may be, and often is, distributed to respondent members as patronage dividends.

Par. 7. For many years prior to 1947, respondent Clover’s corporate predecessor, referred to in Paragraph One, engaged in the same business as respondent Clover as above alleged.

Par. 8. The acts and practices of respondents and of each of them, as hereinabove alleged and described, violate subsection (c) of Section 2 of said Clayton Act as amended by the Robinson-Patman Act.

INITIAL DECISION BY ABNER E. LIPSCOMB, HEARING EXAMINER

On November 8, 1955, the Federal: Trade Commission issued its complaint in this proceeding, charging the Respondents with violation of subsection (c) of Section 2 of the Clayton Act as amended by the Robinson-Patman Act, approved June 19, 1936, by receiving and accepting, directly or indirectly, commissions, brokerage or other compensation, or allowances or discounts in lieu thereof, from many of the various sellers from whom they purchase food and grocery products, grocers’ supplies and grocers’ equipment in commerce for their own accounts for resale.

Thereafter, on February 3, 1956, Respondents filed with the Commission their answer to said complaint, and on March 5, 1956, Respondents Clover Farm Stores Corporation and The Lane-Lease Co., Inc., by Grant A. Mason, their President and Treasurer, and Gladys S. Clark, their Assistant Secretary, and all the other Respondents herein, except Respondent The John Blaul’s Sons Company, by their counsel of record, Samuel G. Wellman and Newell Blair, entered into an agreement with counsel supporting the complaint, and, pursuant thereto, submitted to the Hearing Examiner an Agreement Containing Consent Order To Cease And Desist, supported by formal statements of consent thereto and authorization therefor by all the wholesale member Respondents entering into said Agreement by their counsel, Samuel G. Wellman and Newell Blair, and an Affidavit executed by Attorney Samuel G. Wellman, attesting to the formal consent by all wholesale member Respondents to the form of the proposed consent cease-and-desist order contained in the agreement.

At the same time counsel for Respondents submitted a Motion To Dismiss Complaint As To One Respondent, The John Blaul’s Sons Company, stating therein that said company had, on January 1, 1955, prior to the issuance of the complaint herein, ceased to be a stockholder-member of Respondent Clover Farm Stores Corporation, and, by about June 380, 1955, had been fully dissolved and its assets distributed. Therewith counsel for Respondents also submitted an Affidavit executed by Theo F. Blaul, the last acting president of The John Blaul’s Sons Company, attesting to those facts. In view thereof, and of the fact that counsel supporting the complaint does not oppose the granting of said motion, the complaint herein will be dismissed as to Respondent The John Blaul’s Sons Company.

The agreement sets forth that the order to cease and desist contained therein shall have the same force and cffect as if entered after a full hearing, and may be altered, modified or set aside in the manner provided for other orders; and that the complaint herein may be used in construing the terms of said order. After consideration of the charges set forth in the complaint, the agreement, the documents appendant thereto, hereinabove cited, and the provisions of the proposed order, the Hearing Examiner is of the opinion that such order will safeguard the public interest to the same extent as could be accomplished by an order issued after fnll hearing and all other adjudicative procedure waived in said agreement. Accordingly, in consonance, with the terms of the aforesaid a.greement, the Hearing Examiner accepts the Agreement Containing Consent Order To Cease And Desist; finds that the Commission has jurisdiction over the Respondents and over their acts and practices as alleged in the complaint; and finds that this proceeding is in the public interest. Therefore It is ordered That Respondents Clover Farm Stores Corporation a corporation, and The Lane-Lease Co. , Inc. , a corporation, their officers, directors, agents, representatives and employees, directly or through any corporate or other device, in connection with the purchase of food products, grocery products, grocers' supplies and grocers' equipment, or othcr merchandise, in commerce., as "commerce " is define.d in the C1nyton Act, cia forthwith cease and desist from:

Receiving or accepting, directly or indirectly, from any seller anything ofnduc as a commission: brokerage, or other compensation, or any allowance or discount in lieu thereof, upon any purchase made by Respondents Clover Farm Stores Corporation, a corporation, or The Lane-Lease Co., Inc. , a corporation, for resale to their stockholder members, or upon any purchase made by any of said members.

It is further ordered, That the Respondents, The Bayer-Gillam Company, a corporation, Fox Grocery Company, a corporation, W. E. Osborn Company, a corporation, Jos. A. Goddard Company, a corporation, Frey & Son, Inc., a corporation, Consolidated Foods, Inc., a corporation, Krenning-Schlapp Grocer Company, a corporation, Jageman-Bode Company, a corporation, The F. J. Beasley Company, a corporation, M. B. Glackin, Inc., a corporation, Guyer & Caulkins Company, a corporation, Arthur J. Hanson Company, a corporation, The Hornor-Caylord Company, a corporation, David Kirk Sons Company, a corporation, Layton & Company, Inc., a corporation, The Leedom & Worrall Company, a corporation, Peter G. Lennon Company, a corporation, J. B. Maltby, Inc., a corporation, Northern Sales Company, Inc., a corporation, The Theo Poehler Mercantile Company, a corporation, Plumb & Nelson Company, a corporation, Rice Lake Grocer Company, a corporation, E. T. Smith Co., a corporation, Standard Wholesale Company, Inc., a corporation. Waples-Platter Company, a corporation, Wilcox Brothers Grocers, Inc., a corporation, and Barrow Grocery Company, Inc., a corporation, their respective officers, directors, agents, representatives, and employees, directly or through Clover Farm Stores Corporation, a corporation, or The Lane-Lease Co., Inc., a corporation, or any other corporate or other device, in connection with the purchase of food products, grocery products, grocers’ supplies and grocers’ equipment, or other merchandise, in commerce, as “commerce” is defined in the Clayton Act, do forthwith cease and desist from:

Receiving or accepting, directly or indirectly, from any seller, or from Respondents Clover Farm Stores Corporation, a corporation, or The Lane-Lease Co., Inc., a corporation, or from any other agent, representative, or other intermediary, acting for or in behalf or subject to the direct or indirect control of said buyer Respondents, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof upon any purchase made by said member Respondents, or for them by Respondents Clover Farm Stores Corporation, a corporation, or The Lane-Lease Co., Inc., a corporation, or any other such intermediary.

It is further ordered, That the complaint, insofar as it relates to Respondent The John Blaul’s Sons Company, a corporation, be, and the same hereby is, dismissed.

DECISION OF THE COMMISSION AND ORDER TO FILE

REPORT OF COMPLIANCE

Pursuant to Section 3.21 of the Commission's Rules of Practice, the initial decision of the hearing examiner shall, on the 24th day of April, 1956, become the decision of the Commission; and, accordingly:

It is ordered, That respondents Clover Farm Stores Corporation, a corporation, The Lane-Lease Co., Inc., a corporation, The Bayer- Gillam Company, a corporation, Fox Grocery Company, a corporation, W. E. Osborn Company, a corporation, Jos. A. Goddard, a corporation, Frey & Son, Inc., a corporation, Consolidated Foods, Inc., a corporation, Krenning-Schlapp Grocer Company, a corporation, Jageman-Bode Company, a corporation, The F. J. Beasley Company, a corporation, M. B. Glackin, Inc., a corporation, Guyer & Calkins Company, a corporation, Arthur J. Hanson Company, a corporation, The Hornor-Gaylord Company, a corporation, David Kirk Sons Company, a corporation, Layton & Company, Inc., a corporation, The Leedom & Worrall Company, a corporation, Peter G. Lennon Company, a corporation, J. B. Maltby, Inc., a corporation, Northern Sales Company, Inc., a corporation, The Theo Poehler Mercantile Company, a corporation, Plumb & Nelson Company, a corporation, Rice Lake Grocer Company, a corporation, E. T. Smith Co., a corporation, Standard Wholesale Company, Inc., a corporation, Waples-Platter Company, a corporation, Wilcox Brothers Grocers, Inc., a corporation, and Barrow Grocery Company, Inc., a corporation, 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.

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