Union Bag & Paper Corporation et al.

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IN THE iatter OF mnON BAG & PAPER COHPORATIO ET AL.

COKSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VTOJ ATION OF Tile FEDEIL\L TRADE CO \nIlSSlON ACT AXD OF SECS. -\XD 8 OF THE CLAYTON ACT Docket 6391. Complaint, June 30. 1955-Decision, Mny 10, 1956 Consent order requiring two manufacturers of ('orrugated boxes and sheets--ne manufacturing container board in excess of its o\vn requirements and the other mainly a converter and dependent on a limited number of manufacturers for its supply, with sales ill 1954 of $105 000 000 and 824 000 000 respectively-to ceaiSe violating the merger and interlocking directorates sections of the Clayton Act through entering into contracts which provided that the larger. Cnion, buy a substantial amount of common stock in the smaller, Hankins, and that Hankins' controllng stockholders vote for election to its board of directors of a director of Union; which provided further that Vnion not acquire stock of any substantial competltor of lIankins having plants in the latter s territory, and that Hankins restrict its production of container board and, with certain exceptions, confine its purchases thereof to Union.

Before illi'. John Lewis hearing examiner. Mr. Fletcher G. Oohn and l1h. Paul Ii Dixon for the Commission. Mr. Walter O. Taylm' , Jr. and Mr. Oarney W. Mimms of Kew York City, for Union Bag & Paper Corp.

Mr. Philip E. Hoffman of New York City, for Hankins Con. tainer Co.

CO?IPLAINT The Federal Trade Commission, having reason to believe that the corporations named as respondents in the caption hereof, and hereinafter more particularly designated and described, have violated, and are now violating, the provisions of Section 5 of the Federal Trade Commission Act (15 U. S. C. Sec. 45), and the provisions of Section 7 of the Clayton Act (15 U. S. C. Sec. 18) as amended and approved December 29 , 1950, and Section 8 of the Clayton Act (1" U. S. C. Sec. 19) as amended, and it appearing to the C011mission that a proceeding by it in respect thereof would be in the public interest hereby issues its complaint, stating its charges in that respect as follows:

COUNT I \R\GRc\l'I- 1. Respondent -Union Bag 8: Paper Corporation: hcrcillllftCl' l'efcrrccl to as " respondent Union is a corporation organized UNION BAG & PAPER CORP. ET AL. 1279 1278 Complaint and existing under the laws of the State of Kew Jersey, having an offce and a place of business located at 233 Broadway, New York 7 Kew York.

Respondent Hankins Container Company, hereinafter referred to as "respondent Hankins " is a corporation organized and existing under the laws of the State of Ohio, with an offce and a place of business located at 14801 Emery Avenue, Cleveland, Ohio. PAH. 2. Respondent Union is one of the oldest companies in the paper packaging field. The company ,vas originally a patent holding company for paper bag machinery. It reorganized in 1874 to become a manufacturer of paper bags, and subsequently acquired pulp and paper mills to supply paper to its bag manufacturing plants. In its early days, when paper bags were made from sulphite paper, respondent Union owned and operated sulphite mid::. During the early twenties the introduction of kraft paper as a superior material for bags forced respondent Union to abandon its sulphite Inills and change its paper machines over to the production of kraft paper, and purchase foreign pulp for such lilachines. By the ea.rly thirties, due to the rapid expansion of respondent Union s bag business beyond the productive capa,city of its paper machines, it was necessary for respondent Union to rely on outside sources for pulp and in addition purchase paper in the open market. By the year 1935, respondent Union was the largest producer of retail store and small industrial paper bags and wrapping paper in the industry. In the year 1935 respondent Union began the erection of a pulp and paper mill in SavanlULh, Georgia, which would ,use southern pine as its raw material The first paper machine came into production in July 1935 at this plant. (The term "unit" designates a paper machine and suffcient pulp manufacturing facilities to supply that machine, each unit being comparable to a complete mill except that all units in the plant are under one roof. ) At the end of 1937 a third unit came into produc. tion, so designed that it could produce container board as well as paper. "lVith this addition, respondent Union added container board to its sales of paper products in 1938. At that time this board was sold to independent manufacturers of boxes. In .June 19"16 respondent Union made the decision to build its own box factory, adjacent to its mill at Savannah, Georgia. This box factory commenced operation in September 19.J7. This factory was designed to convert only about one-half of the total board production of respondent Union. In order to assure a market for the production of its container board, in the latter half of H)47 respondent Union negotiated the purchase of t"\vo box factories, at Trenton, X ew .Tersey, and Chicago, Illinois, and the purchase of a 48112 percent interest in Complaint 52 F. T. C.

a box factory at .J amestown orth Carolina. Since the purchase of the plants at Trenton, New .Jersey, and Chicago, Illnois, respondent Union has subsequently made additions t.o these factories, including a new corrugator at the Trenton plant.

In 1945 respondent Union sold all of the container board which it Inanufactured. In 1947 respondent union, in addition to selling container board as such, began t.o onvert substantial amounts of same into corrugated boxes and sheets in its own facilities and. offer such corrugated boxes and sheets for sale. In the calendar ye,,, 1952 respondent Union sold 111 801 tons of container board and in the same year sold 522 tons of such container board in the form of corrugated boxes and sheets which said respondent had converted at its own plant from the container board which it had produced. In the calendar year 1953 it sold 160 682 tons of container board which it had produced, and 108 846 tous in the form of couverted corrugawd boxes and sheets. In the calendar year 1954, it sold 160 304 tons of container board which it had produced, and 106 929 tons in the form of converted corrugated boxes and sheets.

For the calendar year 1954 respondent Union had net sales of $105 502 849, which included its sales of container board as such, as well as its converted corrugated boxes and sheets. At the end of the alendar year 1954, respondent owned and operated both a paper and a pulp mill at Savannah, Georgia. It owned and operated bag factories at I-Iudson Falls, New York, Savannah, Georgia, and St. Louis lVIissouri. It owned and operated corrugated container plants at Sava,nnah, Georgia, Trenton e\V .Jersey, nnd Chicago, Illinois. Respondent Union is now, and has been for many years last past engaged in the sale of container board and corrugated boxes and sheets t.throughout the Unit.ed States. However, its sales of these products have been largely confined to that area of the United States east of the Itocky yIountains, and principally in that section of the United States lyi.ng adjacent to and B,ast of the iississippi. River. PAR. 3. Respondent I-Iankins is one of the oldest COllyerters of container board into corrugated boxes and sheets in the 1;united States. In the year 1954, respondent Hankins owned and operated plants at , Illinois, I\liamis-Union, 1\ ew Jersey, Elmira, Kew York, Chicago burg, Ohio, and Little Rock, Arbtnsas, at which it converted container board into corrugated boxes and sheets. In addition to these plants respondent Hankins operated as a subsidiary corporation, under the name of I\lunl'oe Falls Paper Company, an Ohio corporation, a pulp mill wherein it manufactured liner board. Jlm,"ever, the capacity of this subsidiary pulp mill has never.r been suffcient to satisfy respondent Hankins requirements of liner bmtrd. Prior to June 1954, when the UNION BAG & PAPER CORP. ET AL. 1281 1278 Complaint contracts and agreements hereinafter described were entered into between respondent Hankins and respondent Union, it was necessary for respondent Hankins to attempt to buy and purchase from the limited number of manufacturers of container board the additional amounts of that product needed for its manufacturing processes. Respondent Hankins' operations in manufacturing corrugated boxes and sheets require approximately 100 000 tons of container board annually. The greater proportion of this had to be purchased by respondent Hankins from the manufacturers of such board. respondent Hankins' annual total dollar volume of sales approxi. mates $24 000 000.

Respondent Hankins is now, and has been for many years last past engaged in the sale of corrugated boxes and sheets throughout the united States. However, its sales of these products have been largely confined to the area of the United States east of the Rocky Moun. tains, and principally in that section of the United States lying adjacent to and east of the j)iississippi River. PAR. 4. In addition to respondent Union, there are but a limited number of manufacturers of container board in the United States. within the past several years there has been a tendency on the part of the manufacturers of container board to offer but a limited amount of container board for sale to the independent converters in the United States. This trend has partially been caused by the fact that several of the producers or manufacturers of conta iller DoaTel have acquired or built their mvn conversion facilities wherein they manufacture corrugated boxes and sheets, and in this process utilize most of the board that they individually manufacture. However, as here- ;nbefore set forth, in the year 1954 respondent L"union produced -offered for sale, and sold more container board tha,n it used in manu. facturing corrugated boxes and sheets.

PAR. 5. As used herein, container board collectively refers to liner board and corrugating medium. It applies to a type of paper used primarily for the manufacture of sheets which, in turn, are manufactured into boxes.

A sheet is a paperboard from which a box is made. It is produced by putting the corrugating medium through a machine, where it is fluted and formed into a corrugated materia,I. The corrugated material is then inserted between two sheets of liner board and run through a combining machinc, where they arc combined into a sheet or board by the application of an adhesive. As the sheet passes through the combining Inachine, it is cut into the desired widths and lengths rea.dy for COllyersion into boxes.

Complaint 52 F. T. O. PAR. 6. In June ancl July 1954, respondents Union ancl Hankins entered into fl. series of contracts and agreements which, among other things, provided:

1. R.respondent I-Iankins was to increase its comDlon shares of stock from 2'18 725 to 300 000 and respondent Union was to buy 25 000 shares of the authorized but unissued stock, in return for an estimated purchase price of $1 872 250;

2. The contract or agreenlent for the stock purchase was supplemented by a stockholders' agreement whereby ten of the stockholders of respondent I-Iankins, who represented a majority of such stockholders both in number and amount, agreed, in order to induce respondent 'Gnion to enter into the stock purchase agreeme,nt with Hflnkins that, so long as the container board contract, hcrcina.after described, remained in effect, they would vote their stock for the election of a director of the Board of Directors of respondent Union to the Board of Directors of respondent Hankins; 3. The 25 000 shares of stock in respondent Hankins, \which were to be purchased under the stock purchase agreement by respondent -Cnion, plus the 176 540 shares in respondent l-lankins which were uwned by the stockholders who entered into the supplemental stockholders: agreement, constituted 662h percent of the authorized a.nel outstanding stock of respondent I-Iankins; 4. R.respondent Hankins agreed not to sell or transfer any of its stock to a competitor of respondent lJnion and respondent Union agreed likevi,ise not to sell or transfer any of respondent IIankins stock to a competitor of either respondent during the life of the container board contract;

5. The stock purchase. contract gave respondent :Hankins an option to purchase any stock of respondent Hankins which respondent Union ll1ight wish to sell or tra.nsfer during the life of the container board contract and for five years thereafter;

6. Respondent Union a.greed that it would not, without prior consult.ation with respondent IIankins, purchase or acquire any stock of a. box manufacturer "which IULS plants located in the a.rea also served by plants of respondent Hankins * * * L if) the competition between the plant of B ankins and a plant of the other manufacturer * , * be of a substantial nature 7. Contemporaneous with the stock purchase agreement and to be considered as supplementing such agreement, the respondents entered int.o a container board contract, hereinbefore referred to, for the sal by respondent Union of minimull1 and maximum quantities of liner board and corrugating medium. This agreement or contract was to run for a period of fifteen years commencing July 1, 1954, renewable UNION BAG & PAPER CORP. ET AL. 1283 1278 Complaint on a year-to-year basis after June 30 , 1969, unless and until cancelled by either patty s giving not less than 5 years' prior written notice to the other of sllch eanccnatioll effective as of June 30, 1969, or as of any June 30 thereafter; however, no such notice of cancellation could be effective prior to June 30, logo. The maximum amount involved was 16,000 tOllS for each calendar quarter-annual period, beginning with the second half of 195'J and extending through 1969; the mini.mum amOlmts range from 1 000 tons for each calendar qua.rtcranllual period, beginning with the second half of 195,1 to 16 000 tons beginning with 1959 and extending through 1969; 8. Under said container board contra.ct agreement, it is provided that as part of the container board to be purchased by respondent I-Iankins from respondent Union, respondent Hankins agreed to buy from respondent Union any corrugating medium it lllay purchase during t.he t.erm of t.he container board cont.ract in excess of (a) 5 400 tons in any calendar quarter-annual period; and (b) any amounts of corrugating medium purchased by respondent Hankins fronl 1Vest Virginia Pulp & Paper Company and Green Bay Pulp & Paper Company under existing contracts which provide for maximum aggregate purchases of 900 tons monthly;

9. The stock purchase agreement further provided that if the purchase of container board and corrugating medium by respondent I-Iankins from respondent Union under the container board contract should amount in the aggregat.e to 65 000 tons in a calendar year, then the two respondents would meet and consider the purchase of additional stock of respondent II Lnkins to a maximum amount that would bring respondent (-cnion s stock interest in respondent Hankins to 25 percent in interest, on tenns and conditions to be then mutually agreed upon;

10. Respondent 1-1anki11s was allowed, under the terms of the container board contract, to reducc its purchases for any calendar quarterannual period below\v the maximum qlUlntity specified in such agreement for such period, for an am01U1t not exceeding 15 percent of the aggregate quantity so provided to be purchased by respondent Hankins for that period;

11. LTnder the terms of the container board agreement, if respondent I-1ankins should require more container board than the quantity which it is obligated at any time to purchase from respondent Union, then excluding (a) any commitments of respondent :Hankins under its then existing contracts with 1Vest Virginia Pulp & Paper Company, International Paper Company, and Green Bay Pulp & Paper Company; (b) liner board (not including chip) to a maximum amount of 2 500 tons in any calcndar quarter-annual period from respondent Complaint 52 F.

Hankins' Munroe Falls plant; and (c) corrugating medimn to a maximum of 5 400 tons in any calendar quarter.annual period, respondent Hankins agreed that it would advise respondent Union of such additional tonnage and would give said respondent the opportunity for a period of 30 days to negotiate with it for the sale of such additional tonnage;

12. Respondent Hankins agreed that it would not consume more than 2 500 tons of the liner board (not including chip) produced by it at its Munroe Falls plant in any calendar quarter-annual period; 13. The prices which respondent Hankins was to pay for the container board purchased from Union were not to "be higher on sellers for principal grades. * * * than the market price tbcn in effect of the largest suppliers in the domestic national market." PAR. 7. Respondents have, since 1954, performed, and are stil performing, their respective obligations and undertakings set forth in Paragraph Six; furthermore, any and all parties who assumed any obligations or undertakings lmcler said contracts or agreements have likewise performed and are still performing same. There has been elected to the Board of Directors of respondent Hankins, Alexander Calder, Jr., Executive Vice President and Gcneral Manager and a member of the Board of Directors of respondent Union. Also, R. Carl Chandler, a Vice-President of respondent union has been elected as a member of the Board of Directors of the respondent Hankins.

PAR. 8. In the course and conduct of its business, respondent Union has engaged in commerce as "commerce" is defined in the Federal Trade Corrunission Act, having shipped its container board and corrugated boxes and sheets, or having caused them to be transported from their places of manufacture to purchasers thereof located in the same and in other States of the United States and in other areas subject to the jurisdiction of the United States. Respondent Hankins, in the course and conduct of its business, has engaged in commerce as commerce is defined in the Federal Trade Commission Act, having shipped its corrugated boxes and sheets, or having caused them to be transported, from their places of manufacture to purchasers thereof located in the same. and in other States of the United States and in other areas subject to the jurisdiction of the united States.

Each of the respondents maintains a constant course and current of trade in their respective products in commerce bet\veen and among the various States of the United States.

PAR. 9. Except to the extent that competition has been hindered frustrated, and lessened as set forth in this complaint, respondent UNION, BAG & PAPER.. CORP. E'l AL. 1285 1278 Complaint Union has been, and, is, in petition with other corporations, firms partnerships, and individuals engaged.in the sale and distribution of container board, in commerce, as the term is defined in the Federal Trade Commission Act.

Except to the extent that competition has been hindered, frustrated and lessened, as set forth in this.-complaint, respondents Union and Hankins have been, and are, in competition with each other and with other corporations, firms, partnerships, and individuals engaged in the sale and distribution of corrugated boxes and sheets, in commerce as the term is defined in the Federal Trade Commission Act. PAR. 10. The aforedescribed contracts and agreements as set forth in Paragraph 6 , and the obligations and undertakings imposed thereby, as well as the fulfillment of such obligations and undertakings, and the acts and, practices likewise performed pursuant thereto, are a part of, and were entered into and fulfilled, maintained and cffectuated in furtherance of, as part of, and pursuant to, an understanding, agreement, combination, conspiracy, and planned common course of action entered into in the year 1954 by and between respondent Union and respondent Hankins to adopt fix, and adhcre to the practice and policy of restricting and restraining competition in the offering for sale, sale, and distribution of container board corrugated boxes, and corrugated sheets, in commerce between and among the several States of the United States. PAR. 11. The capacity, tendency, and effect of the aforesaid understanding, agreement, combination, conspiracy, and planned common course of action and the policies, acts, practices, and the fulfillment of the obligations assumed and undertaken by the contracts or agreements between the respondents in the year 1954 have been, and are now, among others:

1. To monopolize, or may tend to monopolize, in respondent Union the production, sales, and distribution in commerce of containcr board and corrugated boxes and sheets. 2. To limit, restrict, and prevent actual and potential competition between respondent Union and other producers andmanuracturers of container board in offering for sale, selling, and distributing in commerce container board.

3. To limit, restrict, and prevent the production by respondent Hankins of liner board.

4. To limit, restrict, and prevent actual and potential competition pricewise by and between respondent Union and respondent Hankins in the offering for sale, sale, and distribution in commerce of corrugated boxes and sheets.

1286 FEDERAl, TRADE COMMISSION DECISIONS Complaint 52 F.

5. To restrict and restrain all other forms of actual and potential competition by and between respondent Union and respondent Hankins in the offering for sale, sale, and distribution by them of the corrugated boxes and sheets manufactured or produced in their respective plants.

6. To eliminate respondent Hankins as a substantial competitive factor in the manufa,cture, sale, and distribution in commerce of corrugated boxes and boards.

7. To further concentrate the manufacture, sale, and distribution in commerce of container board.

8. To eliminate the manufacture, sale, and distribution in commerce of corrugated boxes rmc1 sheets by independent manufacturers who arc not integrated ,dth or a part of the manufacture of corrugated paper' PAR. 12. The policies, acts, and practices of the respondents, all and singularly, as hereinbefore set forth, are to the prejudice of the pnblic have a clangerous tendency to unduly hinder competition, to enhance the prices which the consuming pubhc must pay for container board and the products manufactured therefrom, including corrugated boxes ana sheets, and to create a monopoly in respondent l,Tnion in the manufacture, sale, and distribution in commerce of container board a, corrugated boxes and sheets, a.nd constitute unfair acts and practices &nd unfair methods of competition in commerce ..""dthin the intent and meaning of Section 5 of the Federal Trade Commission Act. COUNT II PARAGRAPH 1. The allegat.ions of this Paragraph are the same as the allegations made in Par agraphs 1 , 2, 3, 4, 5, 6 and 7 of Count 1. PAR. 2. R.respondent Union has capital, surplus, and undivided profits aggregating more than $1 000 000, and is not a bank, banking association, trust company, or common carrier subject to the Act to regulate commerce, approved February 4, 1887. Hesponclent IIankins has capital, surplus, and undivided profits aggregating more than $1 000 000, and is not a bank, banking association, trust company, or common carrier subject to the Act to regulate commerce, approved February 4, 1887.

PAR. 3. Respondent 'Union is engaged in the manufacture, shipment, and sale in interstate commerce of corrugated boxes and sheets. R.respondent Hankins is engaged in the manufacture, shipment, and sale in interstate commerce of corrugated boxes and sheets. Hesponclents Union and Hankins, in the regular course of their respective businesses, in the offering for sale, sale, and distribution of corrugated boxes and sheets, cause the same to be shjpped and , .

UNION BAG & PAPER GORP. ET AL. 1287 1278 Complaint transported from the various points of production in certain respective States through and into other States of the united States. They are in competition between themselves in the offering for sale, sale and distribution of such products in commerce, as "commerce " is defmed in the Clayton Act.

For many years, respondents Union and Hankins, by virtue of their business and location of operation, have been, and now are, competitors, so that the elimination or competition by agreement between them would constitute a violation of a provision or the antitrust laws. PAR. 4. Since the latter part of 1D54, one Alexander Ca1cer, Jr. ha,s been a director, at the same time, or respondents Union and IIankins, and is now a director of respondents -Cniou and flankins. Since the latter part or 195- , respondent union has permitted Alexa,ncler Calder, Jr., to be elected and to serve as onc or its directors at the same time that Alexander Calder, Jr., was a director or 1'e. spondcllt Hankins; and at the present time respondent Union cont.inues to permit AlexRmler Calder, Jr., to serve as one or its directors at the same time that Alexander Calder Jr., is a director of respondent Hankins.

Since the latter part of 1D54, respondent Hankins has permitted Alexander Calder, Jr., to be elected and to serve as one of its directors at the same time that Alexander Calder, Jr., was a director of respondent Lnion; and at the present time, respondent I-Iankins continues to permit Alexander Calder, Jr., to serve as one of its directors at the same time that Alexander CaldeT, Jr., is a director of respondent Union.

PAIL 5. The acts and practices, as hereinabove alleged, arc continuing and are in violation of Section 8 of the Clayton Act. COUXT III .\RAGRAPH 1. The allegations of this Paragraph ate thc same as t.he a.llegations in Paragntphs 1 , 4 , 5, 6 and 7 of Count I. PAR. 2. Respondents Union and Hankins, in the regular course of t.their respective businesses, in the offering for sale, sale, and distribution of corrugated boxes and sheets, cause the same to be shipped and transported from the various points of production in certain respectiyc States through and into other States of the TJnited States, and both respondents are engaged in commerce, as ':commerce" is defined in the Clayton Act.

In the course and conduct of its business, respondent union has bee. , and is now, engaged in commerce, as "commerce " is defined in the Clayton Act, hl offering for sale, selling, ana distributing container boarel and causing the same to be shipped and transported from 1288 FEDERAL TRADE COlcDlISSION DECISIO,,S Complaint 52F.

its point of production in the State of Georgia through and into other States of the United States.

Prior to June 1954, respondents Union and Hankins were in direct competition in the offering for sale, sale, and distribu60n of corrugated boxes and sheets in that area of the United States east of the Rocky ronntains and principally in that section lying adjacent to. and east of the )fississippi R,iver.

Prior to June 1954, respondent 'Gnion was in substantial competi tion ""with other manufacturers of container board in the offering for sale and sale of container board to respondent Hankins. PAR. 3. In June 1954, and subsequent thereto in the same year respondents 'Cnion and IIankins entered into the agreements outlined in Paragraph Six of Count I of this complaint and made a part of Count III in Paragraph One hereof. The effect of the acquisition of Hankins' stock by Gnion, together with the other collateral agreements and understa,ndings may be substantially to lessen competition or tend to create a monopoly, in violation of Section 7 of the Clayton Act, in the following ways, among others:

1. Actual and potential competition between respondents Union and IIankins in the offering for sale and sale or distribution of corrugated boxes and sheets throughout. that area of the united States adjacent to and east of the l\iississippi River has been eliminated. 2. Actual and potential competition generally in the offering for sale, sale, and distribution of corrugated boxes and sheets may be substantially lessened.

3. H,esponc1cnt union s competitive advantage over other COIlYCrters including those engaged in the manufact.ure, sale, and distribution of corrugated boxes and sheets, may he enhanced to the detriment of actual and potential competition.

4. Respondent I-Iankins has been permanently eliminated as a substantial competitive factor in the oiIering for sale, sale, and distribution of corrngated boxes and sheets.

5. Actual and potential competition between respondent Union and other manufacturers of container board in the solicitation and sale of container board to respondent Hankins has been eliminated. 6. Actual and potential competition generally in the manufacture and distribution of container board may be substantinJly lessened. 7. Respondent Vnion s competitive advant.age over other manufacturers of container board, including those manufacturers e,ngagecl in the offering for sale and sale of container board in that part of the United States adjacent to and cast of the yrississippi River may be enhaneed to the detriment of actual and potential competition. UNION BAG & PAPER CORP. ET AL. 1289 1278 Decision 8. R,pspondent Hankins has been substantially eliminated as a buyer or purchaser of container board in the container board industry. PAn. 4. The foregoing acquisition, acts, and practices of respondent Union, as hereinbefore alleged and set forth, constitute a violation of Section 7 of the Clayton Act (15 D. C. Sec. 18), as amended and approved December 29 , 1950.

IXITL\L DECISIQX BY John LEWIS, HEAIUNG EXA:\IINER The Federal Trade Commission issued its complaint against the above. namec1 respondents on June 30, 1955, charging them ,with use of unf,Lir acts a.ncl practices and unfair methods of competition in commerce, in violation of Section 5 of the Federal Trade Commission Act and with engagement in acts and practices in violation of Sections 7 and 8 of the Clayton Act. After being duly served with said complaint, the respondents appeared by counsel and subsequently entered into an agreenlent containing consent order to cease and desist dated iarch 8 , 1956. Said agreement, which has been signed by counsel supporting the complaint, counsel for respondents, and all respondent.s, and approved by the Director and Assistant Director of the Commission s Bureau of Litigation, has been submitted to the undersigned, heretofore duly designated t.o act a.s hearing examiner herein for his consideration in accordance "ith Section 3.25 of the COIDmision s Rules of Practice nnd Procedure.

Respondents, pursuant to the aforesaid agl'eelr.:ent, hnn admitted a11 the jl1rj c1ict10nal facts alleged in the complaint and have ftgreecl that the record may be taken as if findings of jurisdictional facts bad been made in ac.cordance with slich allegations. Said agreement further provides that respondents waive any further procedural steps be.Iore the hea.ring examiner and the Commission, the making of fu)c1ings of fact or conclusions of law j and all of the rights they may ha.ve to challenge or contest the validity of the order to cease and desist entered in a,ccorc1ancewith said agr ement. It has been agreed that the order to cease and desist provided for in said agreement may be entered without furt.her notice, that when w entered it sha.ll have the same force and euect as if entered after a, full hearing, and that the complaint herein may be used in construing the terms of said otc1e.1. Said agreement purports to dispose of all of this proceeding as to all parties and has been entered into by respondents for settlement purpose,s only and wit.hout admitting that they have violated the law as alleged in the complaint.

This proce,eding having now come on for fmal consideration on the complaint and the aforesaid agreement containing consent order, and it appearing that the order provided for in said agreement covers al) ), Order 52 F. T. C.

the dlegations of the complaint and provides for an appropriate disposition of the proceeding as to all parties, the same is hereby accepted and is ordered filed upon becoming part of the Commission decision pursuant to Section 3.21 and 3.25 of the Hules of Practice and Procedure\ and the hearing examiner, accordingly, makes the following jurisdictional findings and order: 1. Respondent Union is a corporation existing and doing business under and by virtue of the laws of the State of New Jersey, with its offce and principal place of business located at 233 Broadway, in the City of Kew York, State of ew York. Respondent Hankins is a corporation existing and doing business under and by virtue of the laws of the State of Ohio with its offce and principal place of business located at 14801 Emergy A venue, in the City of Cleveland, State of Ohio.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents hereinabove named. The complaint states a cause or action against said respondents under the Federal Trade Commission Act, and the Clayton Act, and this proceeding is in the interest of the public. OIilER It is ordered That respondent Union Bag & Paper Corporation (hereinafter referred to as respondent Union and respondent Hankins Container Company (hereinafter referred to as respondent Hankins ), either directly or through their respective offcers, directors, agents, representatives and employees, together with the successors or assigns or same, directly or through any corporate or other device, in connection with the purchase, offering for purchase, sale offering for sale, or distribution in commerce, as "commerce" is defuled in the Federal Trade Commission Act, and Clayton Act, as amended or container board, liner board, corrugating medium, corrugated boxes, or corrugated sheets (hereinafter referred to collectively as said products ), do forthwith cease and desist from entering into continuing, cooperating in, or carrying out, any planned common course of action, understanding, or agreement between said respondents or between either of said respondents and others not parties hereto, to do or perform any of the following acts: 1. Permitting, or attempting to permit, directly or indirectly, by any means or method, the Rcquisition by respondent Union, either directly or through any of its offcers, directors, employees, agents representatives, assigns or successors of any of the stock, assets 01' control of, or in, respondent :Hankins other than 9% stock interest UNION BAG & PAPER CORP. ET AL. 1291 1278 Order in respondent Hankins, which may be acquired and held according to the proviso hereinafter set forth;

2. Causing, or attempting to cause, any stock, regardless of its type or designation, in respondent Hankins, to be voted or used directly or indirectly, by any means or method, for the purpose or with the effect of having or causing any officer, director, employee agent or representative of respondent Union, or of any subsidiary of respondent 1Jnion, to be elected, appointed, selected or designated as an offcer 01' director of respondent Hankins, or of any subsidiary of respondent Hankins;

3. Permitting, or attempting to permit, directly or indirectly, by any means or method, the respondent Union, directly or through any offcer, director, employee, agent or representative of said respondent or of any subsidiary of said respondent, to control, conduct, or attempt to control or conduct, by any means or nlcthoel, directly or indirectly, the management or operation of respondent Hankins or of any subsidiary of respondent I-Iankins;

4. Hestricting, preventing, limiting or attempting to restrict, prevent or limit the right, power, or privilege of respondent Hankins to seJl or transfer any of its stock;

5. Hestriding, limiting, or attempting to restrict or limit the right power or privilege of respondent Union to purchase or acquire any stock of any box manufacturer;

6. Restricting, preventing, limiting, or attempting to restrict, prevent or limit, the quantity or amount of said products, described in the preamble hereto, which respondent Hankins can or may purchase from seners thereof other than respondent 'Guion; 7. Fixing, or attempting to fix, the maximum amount or quantjty which respondent Hankins shall, or may consume, use, produce, sell or distribute of any of said products produced or manufactured by respondent flankins;

8. Restricting, limiting, preventing, or atte,mpting to restrict, limit or prevent, actual or potential competition between respondent Union and other producers or manufacturers of said products, in offering Tor sale, sening or distributing any of same to respondent Ilankins; It is furthe?' ordered That respondent Union cease and desist from permitting or allowing anyone to be elected or to serve as a director of respondent union or of any of its subsidiaries who is a director of respondent Hankins.

It is further ordered That respondent Hankins cease and clesist from permitting or nJlmving anyone to be elected, or to serve as a clirector of respondent Hankins or any of its subsidiaries who is a director of respondent IT union.

1292 FEDERAL TRADE Coo1MISSION DECISIONS Order 52 F.

It is further ordered That respondent Union, within 90 days from the date of service upon it of tl copy of this order, shall divest itself absolutely, in good faith, retaining no interest ,,,whatsoever therein, of all stock which it now holds or owns, directly or indirectly, in, or of re-spondent Hankins.

It ,is undet8to()d ho-weveT That nothing in this order shan be construed or interpreted as preventing respondent Union from acquiring, O1vning, or holding stock in respondent I-lankins when the total amount of such stock, by whatever means acquired, owned or held does not exceed 0% of the total outsta,ncling capital stock in reponclent 1-Iankins (this is the same percentage of stock interest in respondent I-Iankins which was represented by the 12 500 shares of respondent IIankins acquired by respondent 1Jnion on June 24, 1954 plus the 6 250 shares acquired on ,) nne. 24, 1955, plus the 6 250 shares which \were to be acquired on June 22, 1856, alIundeI' the provisions of the agreements or contracts entered into by and bet1yeen respondent Hankins and n:spondent r:union on June 7 , 1954), JJ1'ovided said stock is held solely for inve.stment. and provided further that respondent Vnion, if it votes such stock, shall not vote it for the purpose, or "with the effect, of evading or viol,lt1ng any of the provisions in this order or of substantially lessening- c01npetition or tending to create a monopoly in any line of commerce in which said respondents are ovided still further that should the Commission bringengagecl and In' any action based upon n alleged violation of these provisos, the burden 01 refuting same shrtll be assumed by respondent 'Cnion. It is fVJ'tho' 'Understood That nothing; in 1nlunctive provision 4 of this order shall be construed as preventing respondent Hankins, acting in good faith and \vithont intent to violate any of the provisions of this orcler from contracting to sell, selling or transferring stock to purchasers not ownec1 controlled or acting under t.he direction of respondent Lnion or any of its subsidiaries. It is further under?'toocl That nothing in injunctive provisions 6 7 and S of this order shall be construed as preventing respondent Union frolll selling t.o respondent Hankins or respondent Hankins from buying, 01' committing itself to buy, from re polldent -Cnion or from ot.hers not parties hereto, any of the products described in the preamble hereof, pnrsnant to contract or c.contracts: PJ' o1)ide.d howe1)e.T That the Commission hereby is not approving or disapproving the legality of any such contract or contrac.s between the sa.id re.spondents for the purchase or sale of such products, with regard to grounds of attack not arising from these specific provisions of the order.

UNION BAG & PAPER COHP. ET AL. 1293 1278 Decision It is further undentood That nothing in this order shall be construed or interpreted as preventing either respondent Hankins or respondent Union from petitioning t.he Commission to reopen these procedings and modify this order to cease and desist because of a change in conditions of fact, law or the public interest, so as to permit, respondent Union to purchase, or respondent Hankins to sell to respondent Union, additional stock in respondent Hankins; and if such petition alleges, as a change in conditions of fact, that there has been a full and complete compliance with all the injunctive provisions of this order, and that the acquisition of such additional stock does not substantially lessen competition or tend to create a monopoly in any line of commerce in which said respondents are engaged, the Commission shall reopen the proceedings and permit the introduction of evidence; and if at such reopening, the petitioning respondent can sustain these allegations, the Commission shall grant such petition to modify this order.

DEcrsTOY OF THE CO::Ul\IISSION AXD ORDER '1'0 FILB REPORT OF CO).fPLIANCB Pursuant to Section 3.21 of the Commission 8 Rules of Practice the initial decision of the hearing examiner shad, on the 10th day of :May, 1856, become the decision of the Commission; and, accordingly: It is (J7'dered 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. 45J524- iHJ- 63 &; , , 1294 FEDERAL TRADE COMMSSION DECISIONS Complaint 52 F. T. C.