The Yale and Towne Manufacturing Company

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IN THE LATTER OF THE YALE AND TOWNE .MANUFACTURING CmfPANY ORDER.! RTC., I REGARD TO THE Al..LEGED VIOLA TION 01' SEC. 2 (a) OF THE CLAYTON ACT Docket 8232. CO/Jp7aint, Sept, JrJ54--Decision, J'lIne, 1956 Order dismissing, for lack of reliable evidence to support a desist order, complaint charging Oile of the nation s largest manufacturers of industrial trucks, vdth discriminating- in price between customers through use of ql1antit;;. discount plans.

Jir. Wiliam H. Smith ncl Mr. BTockman Home for the Com- '!njssiOll.

Jlilbank, Tweed, Hope Hadley, of New York City, for respondent. ITIAL DECISIONDY FHAXK lIlEn, HEAl1KG EXA1UKBR GRANTIKG RESPONDEKT S MOTION TO Dls-=nss The complaint here charges that by reason of respondent granting single order qU:lntity discounts, and cumulative volume discounts available to all, on the sale of it.s inclustria1lift trucks, respondent has diverted business to itself from competitors ",'ho do not grant such discounts, and that there is a reasonable probability that such disconnts will so divert business whereby competition in respondent! line of C011merce is or may be substantially lessened and hindered and t.hat such discounts have a dangerous tendency to create a lllonopoly ill respondent. Answer admitted the descriptive and jurisdictional facts, the respondents acts and practices charged, in substance, but denied the effects thereof charged. At the dose of proponenes evidence, respondent moved to dismiss for failure to adduce suffcient substantial, reliable, and probative evidence of the results and effects charged a.s to make out a prima facie case. After argument by contending counsel said motion was granted. Pursuant to the Commission s R.ules of Practice and aft.er consideration of proposed findings conc.usions submiUed by respondent's counsel, the hearing examiner the,refor makes the following:

FINDINGS 01- ACT 1. Respondent Yale & Towne l\lanufacturing Company is a. corporfltion, organized, existing and doing business llnde.r the la,ys of Connecticut with its principal1 offce located in the Chrysler Building, :.ew York 17 , XC"W York.

Tile YALE AND TOWXE :-IANUFACTURIXG CO. 1581 1580 Findings 2. :.fany years ago, respondent began the manufacture of materials handling equipment, or industrial trucks used in many industries to move merchandise from place to place on plant property, including warehouses, steel mills, foundries, railroad stations and airports. Some of the smaller moelels are operated by hand (hand lift trucks) while larger models of greater capacity are powered by gasoline diesel or electric motors. This equipment is manufactured by respondent at two plants located "t Phil"delphia, Pennsylvania and Chicago Ilinois.

3. Respondent' s industrial trucks are classified into four categories. Two of these are identified Its Cbss "S" and Class ":)". Class " identified respondent' s hand1ift truck, which contains no motor and is the most inexpensive! that respondent manufactures. Respondent' Class "M" type of truck consists of its "IV ork Saver Trucks" and Warehouser Electric Trucks." These are eqnipped with batteries which wil move the truck at about 3 or 4 miles per hour. The other t\VO classes of trucks made by respondent are known as Class "1(" and Class "KG" trucks. Class "K" identified the trucks powered by batteries, and Class "KG" are those powered by gas, diesel, and propane. 4. Respondent's industrial trucks differ widely as to specifications and price. For example, respondent's small hand lift truck with a capacity of about 1000 pounds may be purchased for "approximately $300.00; whereas respondent's large electric models with capacities ranging up to 100 000 pounds are in a price range from $4 000.00 to over $61 000.00 each.

5. R.respondent sells its inuustrial trucks for use and not for resale both through its branch offce salesmen and through independent sales representatives to a large variety of purchasers, principally to large manufacturing plants, steel manufacturers! automobile makers, railroad companies! and other large concerns desiring equipment to move material or merchandise upon their own premises. Respondent is one of the largest manufacturers of industrial trucks in the United States and has secured for itself a large portion of the total availablc market. Respondent' s 1953 sales of industrial trucks from its Philadelphia, Pennsylvania factory were more than substantial and frolll the Chicago, Illinois factory of its wholly owned subsidiary, or division, were $15 000 000.00.

6. In the course and conduct of its business, respondent engaged in commerce as "commerce!! is defined in the Clayton Act having sold and shipped its products manufactured by it at its said factories located in the States of Pennsylvania and illinois, and caused the same to be transported from said states to purchasers located in other States of the United States and in other places under the jurisdiction 451524- 59- 101 ___ _ . ::::: :::: :._ :::_ :::: :: ::::: 1582 FEDERAL TRADE CO:\UdISSIOK DECISIONS Findings 32 F.

of the United States. Respondent also sold substantial qnantitics of its products to purchasers located in the States of Pennsylvania and Illinois.

7. On August I ! 1950! follovdng its discontinuance during 'Vorld War II, respondent resumed the practice of granting quantity discounts to its customers. Such discounts are now in effect and apply to purchases of responclenes Class St J\ft " " and "KG" industrial trucks.

Such quantity discounts grant.ed by respondent are both single order (Schedule A) and cumulative (Schcdulc B). Single order quantity discount.s atc as follows, to wit: Applicable to Do Applicable to 11 pmclw.se of class " 8" aud/ol purclHIMofcla. Amount of discount class ":\1" equipment and/or class "l\O"

equipment crccnt:

O. ------ -Cp to $5 000 - -- u_--_m 1;pto S5 OOO. UOO to Slo,DOIL-- _H-- U--- --- $5 001to$1O OOIJ. $lO OOltoSI5 OOO- - $1O,OOltoS20 (HO. $1:i OOl to $20 000- $20 OUJtoS25 Only -- Over $25 000.-- Lt: t::::: In accordance with the above Schedule A, purchasers are entitled to quantity discounts based on the total price of all such classes or product (Classes "8:: and "l\P' ) purchased on any order or group of orders bearing the same elate and thereafter shipped, provided that the number and type of units and the dates for shipment! are specified on such order or group of orders. Such discounts are stated on the original invoices, and are deducted from the purchase price of all trucks actually shippee!.

Quantity discounts under Schedule B in eiIect since 1950 apply to the cumulative total of the shipments of such classes of product upon o1'le1's received from the purchaser during each 12-month period (ending December 31st of each year, or on such other date as may be the end of the purchaser s regular contract year with the company), excluding, however! all shipments upon ,,,which Schedule A discounts shall have been allowed, as provided. Schedule B discounts do not appear on the original invoices, but are rebated in a lump sum after the close of such year. Under both Schedulcs A and B, purchases of Classes " 8" and " l\r: trucl s may be combined to secure maximum discounts. Purchasers are required to indicate on their pureha, orders whether Class A or B discount applies. :::: :::::: :::: :::: :: : ::: : ::::: ::::: :::::::::: :: ::: ::: ::::: :::::: :: : : g:gg :ggg::ggg: 'TE YALE A.l\D TOWNE MAI\rcACTGRING CO. 1583 1580 Findings Respondent s cumulative quantity discounts are as follows: I AppJicableto Applicable to pmcbuses of du s ;' 8" and/or i purcbases ofcla.s Amount of discount . cla.s J\l" EQuipwl'ut K" and/or class KG" Percent.-----------_Hu------- I"Lpto$S OOO -- "LpequipmenttoS5 OOO. OOO to UOO - -- --.--- $5 001 to $lO,OOU. i - i . : :: :==:=: I gtt With the exception that the percentages of discolUlts granted and oU1 ts upon which computed as to purchases of Class "K" and Class "KG!! trucks are in some respects different from the allowances applicable to Class " s" and Class "~1" trucks, in all other respects the requirements and conditions for receiving them as hereinbefore stated as applicable to Cbss "S" and Class ":.1" trucks are the same. 8. The record abundantly shows that these discounts were granted and that the rebates by sepa,rate credit memorandum made annually by respondent to those entitled thereto nndcr Schedule B, supra were substantial in many instances, and necessarily resulted in a lower net acquisi60n cost to the purchaser than the cost to a purcha,ser buying in quantities not entitling him to any discount. 9. Although respondent in its ans.wer has admitted that it is in competition with other manufa,cturers of industrial lift trucks, and the record so shows, nevertheless respondents counsel in the crossexamination of the offcials of five of these competitors has brought out that the various models of their trucks and its trucks are not identical, that their features differ III some respects, that the specifications and engineering differ. This however, does not conclusively establish that two given products do not compete for purchase. The best evidence of whether both strive for the same purchaser s dollar comcs from the man with tlmt dollar-if he is interested in both for a given job of work, if he weighs one against the other for its function, then they arc competitive. Such evidence is not in this record but the fact that such evidence is the best evidence does not mean it is the only acceptable evidence. :Here responclenfs competitors have each designated certain models of theirs and certain models of respondent:s which they testified were comparable in function and performance and therefore competitive. 1Vhile this is of course opinion it is nevertheless based on years of endeavoring to sell against rcspondent' s equipment and is of sufcient weight at this stage of the case at least to warrant a finding, here made! that respondents prod- 1584 FEDERAL TRADE COM1llSSIO),T DECISIONS Findings 52 F.

ucts do directly compete with designated products of other manuracturers.

10. To sustain the charge of actual or potential divcrsion of trade and its effect, counsel offered evidence from five of respondent' s competitors, a responsible offcial of each testifying plus a salesman of each two of them. Since this is the focal point of attack for insufciency and the nnb or this decision it is rclt this testimony whose quality, weight and credibility are in direct dispute should be outlined. 11. George Raymond, 33, president or the Raymond Company, Greene, New York, with that company since 1946 as sales manager then vice president, and recently president, testified that it began the manufacture and sale of hand lift trucks in 1930 and entered the electric truck field in 1950, was competitive with respondent on a limited number of models of the latter as well as with 15-18 other manufacturers of material moving equipment, that the Raymond Company ranks fourth out or 10 or 20 manufacturers of electrical trucks and sells between 5% and 10% in that field; entirely through independent manufacturers representatives, generally at list price without discounts, except single order quantity discounts, and for one year a cumulative volume discount to one customer of 1% on $16 723.00 which he testified was necessary to get that business. He further testified that his selling agents had complained to him repeatedly over the fact that he did not give cumnlative discounts and it has been a considerable problem to us to keep the sales force satisfied for the past five years against facing a discount policy and not having one ourselves,: and that rcspondenfs discount policy makes a very diffcult selling job to the Itaymond Company. But he admitted that betwccn January 1, 1950, and December 31 , 1954, his business htLd increased 300%, 75% of \\which was in electric trucks in the sale of \which he is most competitive with respondent. He gave as his opinion ! nevertheless! that it is diffcult for him to compete against respondent, and that thc latter s cumulative discount policy tends to tic business to it. .Although he said he knew of his own knowledge gcncraJJy that he had lost sales to respondent, he admitted on crossexamination that he had likewise taken sales away from respondent that it wa,s a day to day occurrence to both lose and gain orders as against respondent as well as other competitors, that he had sold to purchasers who were using respondent:s equipment, that his prices were generally higher than respondents' and generally higher than those of his other competitors, some of whom give cwnulative discounts, and some of whom, do not. He also, admitted that his salesllen were chronic complainers, that they and he had frequently dis cllssed putting in a. rliscount policy! the last time beingimme.diawly THE YALE AND TOWXE UFACTURIKG CO. 1585 J580 Findings before this proceeding started, that if respondent were ordered to cease giving its cumulative discounts in this proceeding he would not adopt such a policy, otherwise he would. Further he admitted that he had had no trouble selling his equipment to large volume purchasers against respondent's competition, although his company does not make or outer the wide range of equipment which respondent does but more or less specializes; that his equipment is not identical with respondent' , the differences therefrom being stressed as selling points and that all other factors--ngineering, quality, performance, service parts, etc. must be equal or nearly equal before price becomes the prime consideration in purchasing. Finally he said his salesmen were interested in a discount policy more as a selling argument rather than in any lower acquisition cost to the purchaser. 12. A salesman for national accounts of the Haymond Company testified that he had sold two Haymond trucks to Loblaw Groceterias that when he went back to sell another one he was told by the warehouse manager that Haymond' s product was better and he could have the business if he would meet the price of competition, and that he had never been able to sell Loblaw since; that respondent had a "much lower price than we were ever able to think about meeting if we had a discount schedule which we do not have." This was in the SUTIlllCl' of 1953. The witness did not see Loblaw s purchasing agent, was unable to fix the times of subsequent visits or attempts to sell and was unable to point out in respondent's tremendous catalog the trucks which he indicated Loblaw bought in preference to Raymond' s. Hence price comparisons are impossible as well as any other comparison of fW1ction, engineering, etc. which might have influenced or determined the purchase. Cross-examination also developed that Loblaw had complained about breakdowns and functional defects in the two Haymond trucks previously purchased and that considerable repair and adjustment had been necessary. Further, respondent's discounts could not have been a factor in the loss of sales, because he admitted Raymond could not have met the price, even with a discount schedule. This testimony is given but little weight by the hearing examiner not only because of its vagueness on vital points but because the witness impressed the hearing examiner as carrying his selling onto the rather than objectivelywitness stand and seeking to make a point, telling the facts-all the facts.

13. O. M. Lund, Vice President and Secl"etary of Barrett Cravens Company, 21 years in the materials handling equipment business 15 of which were spent in connection with sales, testified that that company has manufactured hand lift trucks since 1914 and got into the electric truck business in 1951 through the acquisition in that year 1586 FEDERA.L 'TRADE CO:\D1JSSION DECISIOXS Findings 52 F. T, C, of the Crescent Truck Company;, that his company sells exclusively through manufacturers: representati yes on a national basis mostly to small volmne purchasers without benefit of discounts; that his company \\ as third in size in the hand1lift truck business but being rcla tively new in the electric truck end V\"S but a small factor in that branch of the industry and that the respondent was a competitor of his company on both hand lift and electric trucks. He gave it as his opinion that a large buyer would benefit more from a cud1ulative discount than a small purchaser, that such disCOUllts did not bother his company until it got into the electrical equipment field; that such discounts do have a bearing on the placement of business as an additional incentive to the customer. "To get the order you have to offer the same thing -cumulative discount. I-Ie stated that single order quantity discount is not diffcult to compete with and had no effect on his companies business. It is not clear from the record whether or not his company gave them although some of his testimony seems to so indicate. He further testified that his salesmen tell him of loss of orders because of cumulative discounts offered by competitors; that purchasers switch to competitive equipment especially if buying in the fourth quarter of the year because they get additional discount from the same source even though the prices quoted may be the same. 14. On cross-examination he stated that his trncks are not identical with respondent' , that they are of different design and construction although they perform the same functions; that the majority of busi. ness in Chicago produce market went to his company up to Eve years ago and that Barrett Cravens had most of the bottling industry but lost it. Both losses were to power equipment rather than to hand lift competitors. He testified that purchasers buy ~his product on the basis of price without regard to quality but nevertheless gave as his opinion that if he were a purchasing agent quality would be his first eonsicleration and price his second even though he also stated that if he were purchaser a cumulative discount would influence him in buying. He further testified on cross-examination that there is a tendency to replace electric equipment with trucks from tho same manufacturer because of the parts and maintenance problem but that this tendency was not present in hand lift trucks and that the Crescent subsidiary has gone backwards since its acquisition in 1951 although the parent company's asset position has growIl. This retrogression is principally due to moving and consolidating three plants into one and also partly due to the fact that Crescent trucks were too heavy for floor load which gave rise to a great many complaints and a good deal of diffculty, that engineering changes have been made but that these diffculties have not :yet been overcome "by a long shot." Another reason THE YALE AND TOWNE l\ANUFACTURL G CO. J587 1580 Findings for the retrogression was that Barrett Cravens inherited a great many special orders that Crescent had when acquired, and that these have not as yet all been fined and that Barrett Cravens had made substantial changes which have not as yet produced results. As to what he had heard of the effect of cumulative discounts he could name but one salesman in Columbus, Ohio, who told him he lost the sale of an Elwell-Parker lifter to an unknown competitor because a cumulative discount. offered by that competitor had a "bearing" on losing the sale. He stated he had such conversations with other salesmen but did not remember when, with whom! or what competitors were involved. He admitted that his company had sold large accounts such as Grand Union and Revere Electric Company in competition with respondent and with other competitors who give cumulative discount and stil does so with fair regularity. Hc did not think that a $300 price difference greater on his truck than on respondenes comparable product prevented competition between the two or that it was too hard to overcome because of other features present in his company s truck but hc could not state what those features were. ~When Cresccnt was acquired it had a discount system which was subsequently discontinued but he did not know what sort of discount system it was. He stated that the industry is characterized by active, good and healthy competition and "we enjoy working against them and with them. He stated he had no quarrel with his competitors and the reason his salesmen concentrate on small purchasers is because there are not so many people to convince.

15. L. C. Daniels, Vice President, Buda Division of Alls Chalmers ~fanufacturing Company, testified that Buda was organized in 1881 to manufacture railroad equipment; in 1897 started making gas and gasoline engines in 1927 Diesel; in 1948 began making hand lift trucks for rail ay car loading; and in lU47 -48 acquired two com panies which were making small fork lift trucks. In 1950 he came o Buda from Towmor.or "here he was chief engineer; that at Buda he found a 2 000-pound fork lift truck and immediately began redesigning it and a new line of iark lift gas- powered trucks. Alls Chalmers acquired Buda as a division 1' ovember 1, 1953, Buda sens to distributors who in turn resell to users on 20% margin and at a suggest-ell ),88,de price "\which Budn attempts to maintain by t.hreats to revoke the distl'ilmtorsbip. Buda makes neither hand lift nor electric c(plipJnent. lie gave as his opinion that a schedule 13 discount would certainly giYC :YOll a very good leverage on the company to continue buying equipment over a period of years knowing that you buy over $50 000 worth of merchandise they would get a 5% discount" and the "only way we or anybody else could compete with 1588 FEDERAL TRADE COM).ISSION DECISIONS Findings 52 p, T. C. this practice is to have an equivalent schedule or give the 5% to start with" or a lower list price, jf the purchaser is buying on price only which they frequently do.

16. On cross-examination the witness admitted that Buda s business since he went with them in 1950 has shown a steady npward growth which was tremendous percentagewise and very unusual' and that he could not point to any sale which Buda had lost to the respondent on a price basis; that quality and engineering are primary considerations rather than price, that his distributors may in effect give indirect discounts by reason of trade-in allowances and that they frequently do so, that his company s trncks are not identical with those of respondents or his other competitors and that the different features are selling points. He further stated that Buda has some accounts to which it sells exclusively, just as the respondent does, and that there are accounts that buy from both and that not infrcquently Buda does sell to purchasers who also bny from the respondent in suffcient volume to entitle them to the respondent's cumulative discount and notwithstanding such discOlmts. Hc further stated that purchasing agents will tell you anything as to why they did not buy and that it is therefore impossible to say why business is lost. IIe further testified that he sold to many large purchasing firms who were respondent' customers in spite of respondent:s cumulative discount; that the Ford :Motor Company '\\' as one of respondent:s customer.rs for yel1I'S but that he got into that company with his products and that he is continually making inroads into accounts which formerly bought either from respondent 01' from other competitors. I-Ie thinks this is because he makes a better product. Lastly, he stated that the competition in the industry is very active and very keen, that he saw no lessening of competition therein, that it is more active than in 1953 or prior years that this may be due to current prosperity or it may be due to the fact that the motor lift truck industry is only 15 or 18 years in substantial volume and is constantly expanding.

17. P. K. McCullough, Vice President in charge of sales fereUl' Manufacturing Company, testified that that company had been mannfacturing material handling equipment for 45 years, that he had been with the company 22 years, that they make battery electric fork lift industrial trucks as well as tractors and trailers, that the electric trucks account for 30% of its business and it is merely upon these that he competes through manufacturers' agents and directly through the company's sales organization with the respondent; that his electric truck business is about 4% of the entire industry; that his company has granted discounts to meet competition to offset transportation allowances and to match trade-in allowances; that fercury had a cumulative THE YALE AND TOWNE MANUFACTURING CO. 1589 1580 Findings discount system 20 years prior to 1940 and then discontinued until 1953 when it was reinstated with six customers only and on battery electric trucks only. These were national accmmts and the schedule remained in effect for only one year, it being adopted to make sales because of competition and at the end of the year discontinued because of the accounting problems involved and because it had no effect on sales. It was replaced by order discounts wherever the company felt it necessary to do so; that there was no pattern to these discounts each one being a matter of individual negotiation, that the cnmulative discount schedule of these six customers was identical with respondent' s schedule B but that it was not given to meet any definite competition. "1Ve had no definite feeling at that time that we were going to be written out of a customer s picture by virtue of not being allowed discount." I-Ie gave it as his opinion that a 5% cumulative discount is an influencing factor when all other factors have been considered. W11ile the cumulative discount was in effect for the one year with these six customers his company neither gained nor lost business.

18. On cross-examination he stated that competition was keen the industry, that respondent's discount schedules have no measurable effect on his business, that he did not believe that they had affected his company at aU; he could not name a single sale which had been lost to respondent or any other competitor where the discount was the deciding factor; that quality, service, and delivery were the primary factors in influencing purchases, that the differing features of various trucks were their selling points; that his company s products were not identical ,with those of any other competitor, that he had no trouble in sening AJcoa from $10 000 to $15 000 a year s worth of business over a 10-year period without any discount granted whatsoever and he had no idea why they bought his products, and that one of the trucks they bought listed at $6 600 whereas the respondent' comparable truck listed at $6 110.

10. Wiliam E. RipJey, formerly Assistant Sales ;vfanager, Towmotor Corporation, testified that his primary concern between 1951 and Oct. 1, 19M, was contacts with the national accounts likely to purchase trucks! a national account being a company with a number of plants throughout the country and home offces located either in New York or Chicago. Towmotor s major competitors were respondent and Clark Equipment Company and the deeisive factors influfencing the purchase of these t.rucks is the basic design of the equipment, the engineering, tlle utility, maintenance, service and price. The Towmotor Corporation built its first gasoline fork lift truck in 1943 n,nd has been ma.king them ever since. Price is a very prominent 1590 FEDERAL TRADE CO::l\JISSIOX DECISIONS :r-'inclings 52 F, T. C. factor when purchase is by national accounts because the purchasing offce is away from the plant and the purchasing offcer does not have first hand contact with the equipment and is primarily interested in price and, in his opinion, responclenfs discount schedule B definitely tends to divert business from Towmot.or and his basis therefore was conversations hc had either with the buyer or the purchasing agents of live very large purchasers. The buyer for Continental Can Corporation told him that Towmotor at one time received in excess 80% of Continental Can s gasoline truck business but that they had decreased to less than 10% and that Towmotor had better get on the ball and join the band wagon and match this competitive deal if it expected to get hack to the position it once held with Continental Can nd that by competitive deal he meant a cumulati ve discount scheuule. 1-Ie further testified that he calleel upon the Pllrchasing agent of american Car 8: Foundry for the purpose of sening them Towmotor trucks and wa,s told that if TO'il1motor hadn t changed its policy the purchasing agent could not do anything for them, by \"which hc meant that he was getting a, cumubtive quantity discount from a numbcl' of competitors, among them respondent, because he as Sho\Yll some of these discount agreements, among them respondent s; that he was told that Towmotor could not hope to sell American Car & Foundry any equipment unless it met these competitive discount schedules, At the Robert Ghair Company he was told by a buyer in the purchasing offcc that the company had a discount agreement \"i1,h the respondent, that they had lately received a rebate from them and as a result, the buyer \Vas inclined to influence various plant managers to specify rcspondenfs equipment. in order to increase volume and thereby increase discount; that this company had formerly bought Towmot.or trucks, that he "\Y:lS able thereafter to sen them some equipment but only in those instances "\There the local plant still insisted upon having Towmotor equipment. He further testified tlmt the purchasing agent of -Cnited Stat.es PIY"\Food Corporation stated that there was no reason why they should consider Towmotor equipment inasmuch as they \were receiving the full 5% discount from respondent. This! however! "\vas taken off the face of the invoices rmd was not a cumulative discount. As a result To\"motor could not sell United States Plyvwod any more equipment. lie likewise spoke to the purchasing agent of the Union Carbide & Carbon Company and was told in effect that if Towmotor did not see fit to adopt a discmmt policy)" similar to that which was being offered to them by other manufacturers, including respondent, that Towmotor had very little hope of selling Union Carbide & Carbon but the "\vitness c1i(l not kno\" the circumstances. lie further testified that. all these companies had Tile YALE A."\D TOWNE MANUFACTURING CO. 1591 1580 Findings Towmotor trucks in considerable quantity in their service and that he never he,ard any complaint from them regarding their performanee or specifications or otherwise.

20. On cross-examination this witness testified that sillce leaving Towmotor he has been vice president of Erie Equipment Company which is the Towmotor sales representative for the Cleveland territory and that his compens ltion as such is the same as all other representatives 121j2 % commission off list; that he made no written reports of his conversations with the purchasing offcials of the five companies testiiied about; that Towmotor gave no discounts in 1953 or 195"1- but its sales representatives gave trade-in aHowances and Towmotor has on occasion absorbed freight; that trade-in allowances frequently exceed what eompetitors would aJJow but that this is strictly the profit or loss of the sales representative. He further testified that Continental Can Company was buying gas trucks from the respondent and Clark Equipment Company; that the man he talked to t.here did not mention either one but the witness assumed he meftnt them. Respondent and Clark Equipment Company were mentioned as his competitors by the American Car & Foundry purchasing agent; that that company did not buy from Towmotor in 1952 1953, or 1054, Continental Company did in 19.01-5:053- , that he was shown discount agreements from five firms by the Contmental Company purchasing offcial. Further he testified that the Ghair Company bought from Towmotor in 1951 through 1954 although they were using respondent's trucks and buying from them then also; that United States Plywood bought nothing from Towmotor during these years although he thought he had seen respondent's equipment being used at their Chicago plant; that he was sure that Union Carbide bought from his competitors but did not know from which one; that Towmotor sold to Union Carbide in 1051 but not to his knowledge in 1952 or 1053 and that he did not know about 1954. Further he testified that when these five separate conversations occurred he was not working on any order but was doing missionary work and called to see ,vhy Towmotor was not getting more business. He could not name a single order which Towmotor had lost to respondent because of the latter s discount and his cross- examination revealed that he had practically no knowledge of the cngineering features of comp titive equipment. Towmotor makes only gasoline equipment, no electric trucks, except one small insignificant model. He further testified that Towmotor placed business in 1953 against Bnda, Hyster, Clark and respondent, that each of these all got business in competition with Towmotor and that Towmotor got business in competition with them in 1953 and 1954 that all of them with the exception of Buda gave 1592 FEDERAL TRADE CO:\1J:ISSIO::T DECISIO::'S Findings 52 F, 1' , C.

cumulative quantity discollnts; that 85% of Towmotor sales were direct to the consumer 15% being to its sales representatives! that on the latter he understood Towmotor gave discounts. He testified that he knew Towmotor was competitively priced but he did not know the competitive prices and had never reviewed them, the basis being ,vhat someone told him.

21. Hobert Fairbanks, S"les Manager of Towmotor from 1951 to the time of testifying gave it as his opinion that "I believe that the cumulative discount plan of Yale very definitely tends to and does divert business from Towmotor and other competitors who do not have a similar policy." He further testified that the decisive factors in selling were quality of engineering, \vorkmanship and material service, sales contacts, design! price and safety fa.ctors; that Towmotor began the manufacture of fork lift trucks in 1933 and respondent began it in 1949. He further testified that Owens Illnois Giass Company had for many years been an important customer of Towmotor that he got reports from sales representatives located where Owens Illinois plants were situated, that TowInotor was not going to remain a supplier of Owens very much longer unless it met the cumulative discount plan of respondent and that in .J anuary 1953 he went out with a Towmotor Vice President to visit the executive vice president of Owens at Toledo to see whether or not it ready was a threat. The visitors were referred to the purchasing agent who told them that the fact that TOWlllotor did not have a cumulative discount program was very damaging and that Tmvrnotor was not on Owens home offce list for supplies but that if Owens' plaut manager wanted particular equipment, the purchasing agent would not overrule them and he was shown respondent's agreement and schedule. He further added " were put on guard by them that we were going to have a tough row to sell equipment into their plant unless we had a similar program. Towmotor has continued to seu Owens IUinois Glass but also buys from other competitors including respondent and he thought the reason that Towmotor had maintained the business so far was that it products had preference in the plants. He stated Towmotor s net sales in 1953 to be $19 896 200 and in 1954 to be $16 264 843 and further testified that his market position had dropped 25% in 1954 over 1953. This "Was an estimate based on total industry figures taken from the industria.l truck associations' reports. 22. On cross-examination it developed, however, that these industrial figures did not include in some years certain competitors; that deductions were made for what was considered to be 'jon-competitive products so that they cannot be said to be complete or accurate or comparable in some respects. The witness refused to give exact figures THE YALE A:-D TOW:-E MAKcFACTcRIKG CO. 1593 1580 Findings bnt stuck to percentages. He admitted competitors ' sales also decreased in 1954 but how much is not shown. Towmotor s annual report to the stockholders shows net profit in 1954 of 4.9 of sales as against 0 of sales in 1953. Cross-examination further revealed that the witness did not know the engineering or performance features of his competitors! products slich as drive front axle, trailing axle, engine capacity, engine feed, gas tank location, sliding channels or anticaviJ tation valves in the tilt cyiinders, nor did he know whether or not parts were interchangable between gasoline and electric trucks made by the same manufacturer. He admitted that Towmotor s president had put out reports that Towmotor was gaining a more substantial place in the industry and further stated that competition was active in 1953 in the industry as a whole and presently, and that it was on the increase and that he knevv no member in that industry who was obtaining a monopolistic position. He further admitted Towmotor has 950/ of the business of several national accounts, 50% of the business of approximately 100 national accounts and he was unable to name a single instance \\'here a respondent' s truck was bought as against a Tmvmotor truck where the deciding factor was the discount schedule of respondent. His testimony that Towmotor s business dec"ined in 1954 over 1953 or 1952 was not meant to state that it was declining now. On redirect examination he gave it as his opinion that respondent's cumulative discount has a tying eHect on business in favor of respondent and he estimates that Owens Illinois Glass has 20 plants and that Towmotor had shipped to six or seven of them in 1953 and 19M. He further stated that the totalllnits s01d by Towmotor in 1953 was ;- 737 and in 1954 was 2 (;85. lie \vas unable to point to a single sale lost to respondent because of respondent' s discounts. In 1D54 TowmotoI' Corporation moved into a new larger plant with some dislocation of function resulting.

23. The cross-examination of the last two witnesses, in the greater detail as shown by the transcript, than above smnmarized, and their attitude under it! detracts greatly from its weight and raises a serlons question of credibility on one or two points. Their opinions that respondent's cmDulative discounts diverted or probably would eli vert. business are seriously undermined by the striking ignorance which both displayed about engineering features of competitive trucks! when both admitted that quality of engineering! design, etc. were decisive fa,ct.ors in influencing purchases. Price alone cannot be pilloried as a sale cause, when ignorance of other admittedly determinative factors is so amply demonstrat.ed. This testimony was far from being wholly dispassionate and objecti\'e both men were obviously interested witnesses to the point of impressing the examiner that stopping respond- , 1594 FEDERAL TR/I.DE CO?vil\llSSlOK DECISIONS indings 52 F. T. C.

ent s cumulativc discounts had become a private objective and policy of their employer, in strong contrast to the frank and disinterested attitude of the offcials of Raymond Company, Buda or the Mercury Company, for example. Furthermore, there were frequent retreats behind "I don t remember!! or "I don t have the basic figures " available when conclusions and sweeping statements made on direct examination were sought to be probed.

24. The above slillmarized evidence adduced to support the charge of actual or reasonably probable diversion of substantial business to respondent from its noll-discount granting competitors, allegedly resulting in a substantial lessening of competition in respondent' line of commerce falls into two rough categories in the main-Dpinion and hearsay. The opinions have three principal facets-first, that if the witness were a purchaser, respondents cumulative discount plan would influence him to buy from the grantor, if all other considerations were equal, second, that that respondent's discounts tend to tie business to the grantor by of Ie ring a progressively lower net cost of acquisition for centralizing volume in respondent, and third, that such a discount makes it diffcult to compete with respondent without offering a similar cumulative volume discount. The latter was expressed in variant ways " diffcult to keep the sales force satisfiedtgiving a leverage:: to respondent:s sales effort.s, having a "bearing" on the plac ment of business tend to and does divert business!' to respondent.

25. Opinions! or "informed business judgments " of necessity depe, for t.their validity or weight! upon the record facts from which they are deduced! and cannot prevail if these facts lead irresistibly or more reasonably to a.n opposite conclusion. In the first group above, salesmen speculated lS to the effect on them, if they were purchasers, of respondent:s cumulative discount, with no showing of any prior experience hy them of purchasing functions! either generally or specifically. Their conclusion that they would be affrmatively influenced thereby to buy from respondent, is considerably diluted by the qualification ""when all other factors have been considered': in view of the testimony of most of these competitors of respondent, that engineering, design ! a,nd performance a.re major considerations a, price seconda.ry; and the recorcfs reflection that ra.rely if at all in this industry, are all other factors equal. No Pllrchase.r or purchasing agent was called as a witness to give evidence on this point from the best and most authoritative source. These speculations are further invalidated by the preponderant evidence from the same witnesses that they have never lost a specified sale to respondent ",here respondcnfs eumulati\'e discount vms the deciding factor and by other evi- , THE YALE A2\ D TO\V E MAKT;FACTT;RL\TG CO. 1595 1580 Findings dence of the ste,aely and even luxuriant sales gro\vth of their employers. 26. The second phase of this opinion evidence-the tying effect of a cumulative discount, is, of course, inferable fronl it.s very nature but t.he facts in this industry, at this time at least, are contradictory. These competitors of respondent admitted that it is a day to day occurrence for thenl to sell against respondent to large volume purchasers who had bought and were buying from responde, ! under its discount plan, and! in the case of national accounts, even though the home offce purchasing department might want to channel purchases for cumulation, the plant managers prmrailed in their choice of other equipment, again demonstrating that price is secondary or even tertiary to performance and engineering. There is further credible evidence that some of respondents competitors, giving no discounts have broken into large volume buyers, sllch as Ford )iotor Company, where respondent! or some other discount granting manufacturer, had been previously established as its supplier. 27. The last class of opinions--ompetitive hal1dicap-are likewise invalidated, in this examiner s opinion by the record facts of this highly specialized industry. Two of these five competitors of respondent were new entrants into the Jield-Haymond Company into the electric truck field in 1950, Buda with a line of gasoline fork lift tractors of entirely new design and "starting from scratch" therewith in the same year. In the four succeeding years, Raymond's sales increased 300%, 7590 of which increase was on electric trucks with 'Ivhich it is most competitive with respondent. Buda s increase \vas a steady and most unusual grmvth-a "tremendous percentage.!! The examiner is unable to believe, as asserted by counsel for the complaint that inflation Eisenhower prosperity,:: or boom times does or can account for more than a minor portion of such a, precipitous gain. In fact, R.raymond:s president denied that as a cause. Such dramatic perfonnances do not bespeak stagnant or withering competition but rather what every witness, who was asked, testified that competition was keen, active! and vigorolls and increasing. 1\ cither of these firms had any trouble selling large volume purchasers, and had ma.de tillbstantial inroads and entrees into aCCollllts where respondent or other manufacturers \with similar eumuJntjve (llsl'onnt. pbns to n?span denes, had been firmly est.ablished for years. Both also sold ot.her acc:ounts-to purchasers who buy in suffcient ,"ohmH'. to entitle them to respolll1cnt s discounts, some 01 them buying exclusively, or nearly exclusively from t.these two firms.

28. One of respondents smallest competitors-l\Iercury l\lannfacturing Company-- could see HO measurable effect all its business by spondent\i disc01mts! and did not beJjeTe they affected :Jfercnry at 596 FEDERAL TRADE COMMISSION DECISIO Findings 52 F. T. C, all A fourth competitor, Barrett-Cravens Company, got into the electric truck business 1951 through the acquisition of a subsidiary, , but this retro-which subsidiary had lost sales ground since then gression was principally due to moving and consolidating three plants into one, engineering clificulties and redesigning, and other reasons unconnected ,,,itll respondent' s discount policy. Its vice president characterized competition in the industry as active, good and healthy and "we enjoy working against them and ,,,ith them. 29. The. opinions or the former and present sales officials of the fifth competitor testimonial1y represented in this proceeding- Towmotof: Corporation-are the only ones directly supported! in part at least, by factual ! as distinguished from hearsay mridence! discussed below Towmotol"s sales doJlarwise declined from 19 million in 195:3 7:37 to 2 685. There is no to 16 milion in 1954 and unitwise from :3 . showing, however, as to where this business went. The sales of many others in this business went down also in t.these years but to what extent is not shown. The estimate of market position decline of 25% was based on unknown totals, deductions and comparisons! shown by cross-examination to be too uncertain to be relied on. On the other hand the sales manager was of the opinion that competition in t.he industry was active and on the increase and stated that he knew of no member thereof who was obta.ining a monopolistic position therein. lie was lUlable to name any sale lost to respondent where the latter discount decided the sale. The ex-salesman likewise admitted that Towmotor secured business from discOlmt. givers as well as from n011grantors-how 111uch not being shown.

opinion 30. This brings us to the question of hearsay evidence-the of the last two witnesses being largely based on their relation of what they had been told by the purchasing offcials of six large volume purchasers-namely, that without a cumulative discount schedule such as respondent' , Towmotor could not hope for future orders. \With three of these Towmotor was thereafter lUlable to sell to the best of the witnesses, knowledge. In t.he case of the other three, sales continued but in what volume is not shown. There is also hearsay from Raymond' salesmen a,s to the reason for his losing the sale of three Raymond trucks to respondent, although he was unable to identify what trucks. 31. The hearing examiner is bound by statute (5 U.S. 1007 (c)J, as is the Commission, to decide this proceeding' only upon reliable substantial, and probative evidence. The former does not believe this hearsay meets that test for several reasons, The record here shows that purchasing offcials will, and do, tell salesmen anything, as to why they did not buy and it is thcreforc impossible to say why businessis lost. The record further shows that salesmen :in this industry \ THE YALE AND TOWNE MANUFACTLRlNG CO. 1597 1580 Findings are chronic complainers and give alibis for lost sales as a matter of course. Furthermore! cross-exa.mination seriously det.racted from the general weight (as distinguished from the fact, that it is hearsay) to be accorded the testimony of these two witnesses and the credibility of the first two, as hereinabove pointed out. )101'80ve1', not a single purchasing offcial was calleel as a witness although obviously his testimony would be the best evidence and no explanation appears of record :for this failure, except the reply of cOllnsel in support of the complaint to an inquiry from the examiner all this point. It \vas his statement that no purchaser ,vant.ed this discount stopped because of self interest from which the examiner call only infer that either they would not testify or else would give adverse evidence. ~Whether this is simply surmise or t deduction on counsel's part or whether it is based on actual experience or know ledge, counsel did not state. or is there any showing of the non-availability of the men whose purported statements were related! except the death of one. The fact remains that the absence of the primary evidence raises a presumption, that if produced, it \vould give a complexion to the case at least unfavorable, if not directly aclversc.1: "The production of weak evidence when strong is available can lead only to the conclusion that the strong \vauld have Commission counsel in many other cases3 under thebeen adverse."2 same section of the law for many years past have consistently, yociferously and successfully objected to salesmen of a respondent relating what they were told by purchasing offcials about being able to bu)" more cheaply from named competitors, in support of the "meeting competition defense." There is no basic difference between the one t.ype of hearsa.y and the other in both the source is the same, the relator is the same type of employee and the witness in each situation interested in the outcome of the case. \Vhat is S tuee for the goose should be sauce for the ga.nder and t.he Bureau of Litigation of this Commission cannot blow both hot and cold on the same subject. 32. The record shows the Jist prices on products of Ra,ymond Barrett-Cravens fercul'Y! and Towmot, ol' compared with Est prices on rcspondenfs comparable products-or at least those testified to be comparable and compet.tive by offcials of these companies. :Many of them are considerably greater 01' le, ss per unit, than the maximum 59(/ which respondent allows on purchases of 850 000.000 yet sales are constantly being made thereof. Furthermore, the testimony is thar, the differenti"l between $4 200.00 for" competitive truck as against 815.00 for respondent's truck "is not too bad to overcome." Other differentials run as high as 8500. 00 in favor of respondent's products. Clifton v. U. 8., 4 How 242, Interstate Circuit U. S. 306 U. S. 208. 3'Tlle U!()st rpce1Jt 01" t!1E'l' n. ;)770 , E. Edelmann Co. , Ilnd D. 5768, C, E. Niehoff Co. 451524- 59- 1598 FEDERAL TRADE CO:\'DlISSION DECISIOKS Findings 52 1 . T. C. 33. There is no evidence whatever that respondent's single order discount (Schedule A) had any of the effects allegcd or that it was reasonably probable or possible that it would, in fact the only evidence as to it was that it had no effect whatever and was not a competitive factor.

34. The outstanding and largely determinative factor in this price discrimination proceeding is that in this industry price is not the prime nor determinative factor in the great majority of sales. Finally, applying to this situation various tests or criteria suggested by writers, or economists and in some instances recognized in court decisions, this record affrmatively shows that in this industry in the years in question there has been ease of entry, opportunity for survival, growth, and profit, excellent consumer choice of alternative products, effciency in production and an active race for improvement of product, redesigning and the introduction of new types with snpplier preference by purehasers fluidly responsive thereto, technological advances, and a fluidity and flexibility of market and of competition therein. The evidence is unanimous that competition in this industry in respondenes line of commerce is active, keen! healthy and increasing, and the fact is so filed.

It is believed that the underlying theory and principles of Minneapolis-Honeywell Regulator Co. v. 191 F. 2d786; the Sparkplug decisions-Dockets 3977, 5624, and 5620: the General Foods dismissal, Docket 5675; the Purex Corporation, Docket 6008 support the above conclusions.

35. Although not so stating in so many words! counsel in support of the complaint! in his oral argument on this motion to dismiss, seemed to contend that a cumulative volume discOlmt conclusively presumes the alleged tendency to divert business, substantial lessening of competition and tendency toward monopoly. Looking at such a discount plan in a vacuum, without regard to any particular industry such a prcsW1ption is easily inferable but the commercial facts of life revealed by the record as to t.his industry show the fallacy and t.he da.nger of such a mechanistic interpretat.ion. There may be indust.ries or even lines of commerce! perhaps in fungible goods! for example where such a conclusive presumption may safety be indulged in to t.he public good but this is not. one of them. The law does not so provide! although it. would have been easy for Congress to have flatly and unequivocally forbid cumulative yolmne discounts! nor does the legislative history of the law hint at such a legislative intention. No case so holds, either court or Commission. Indeed! recent opinions of thc Commission indicate a reje.ction of such an automatic disposition of this type of proceeding. If this be coulIsePs position, it is rejected. THE YALE :'I:ND TOWNE ::lA..'\'Gl'ACTI;HING CO. 1599 158U Opinion CQXCLlJSIOXS There is insl1ffc.ient reliable, substant.ial and probative evidence to show that "respondent:s discrirninations in price * * * in many instances in the past, have been enough to divert, and have diverted substantial business from respondent's c.ompetitol's to respondent, and are enough to divert substantia.l business from respondent s c.ompehtors in the future; and, t.he,l'cfor * * * there is a reasonable probability that the effect of * * * may be substantially to lessen competition in the lines of commerce in which respondent is engaged" or that Hsaid practices of respondent also have a dangerous tendency unduly to hinder c.ompetition and create a monopoly respecting effects not only as to l'esponderiUs existing competitors, but also as to respondents potential competitors.

ORDER It i8 ordered That the com plaint herein be, and the same hereby is dismissed.

OPIXIOX OF THE CO.1DIISSIOX By AXDEHSOX, COllnnissionel':

After the reception of evidence in support of the case-in-chief was closed, the hearing examiner filed an initial decision granting the respondents motion to dismiss the complaint under which this proceeding \vas instituted. That decision holds that the evidence has failcd to estabhsh that the differing prices under which respondent has sold its industrial trucks to users have constituted price discriminations \\'within the category of those rendered unlawful under subsection (aJ of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act. The decision below, accordingly, provides for dismissal of this proceeding and counsel, Supp01:ting the complaint has appealed.

The respondent is one of this country:;/s largest manufacturers of inclustrial trucks, which is the term used in the hearings to designate equipment. for moving materials and merchandise from place to place in and about plants! warehouses, mills and railroad stations. They range from small models operat.ed by hand up to large capacity trucks powered by batteries, gas or other means! and vary in price from approximately $300 each up to $61 000. The company's equipment is sold through its branch offce salesmen and through independent sales reprpsentatives. The manufacturing plants and other concerns which are respondent's customers do not buy the trucks for resale but for their O\vn use.

Respondent' s equipment is offered at list prices and its purchasers have been accorded applicable discounts or rebates provided under tvi' 1600 FEDERAL TRADE COM1InSSION DECISIO:\'S Opinion 52 T. C. discowlt plans designated Schedule A and Schedule B. The first schedule is limited to purchases made under a single order or a group of orders bearing the same date. For purchasers receiving this form of allowance, the quantity discount is reflected on the invoice and ranges from 1 % on purchases of a minim= of $5 000 up to 5% for the largest quantity brackets. The cumulative volume discounts afforded wider Schedule D have been granted in the form of annual rebates and computed on the aggregate volume of customer s purchases during each twelve-month period. Respondent's counsel reported in the course of his oral argument that the Schedule B discounts were discontinued shortly after the hearings were concluded in this case. In fignring discounts to be a!Jowed customers ,mder Schedule B , respondent has excluded any shipments on which said customers had been allowed quantity discounts ,mder Schedule A. In addition to alleging that the differing prices at which the respondent sold its merchandise under each of the aforementioned schedules constitut.ed discriminations in price, the complaint further charged they have had or may have the adverse effects on competition which are proscribed under the statue and accordingly were unlawful. In this connectioll ! the complaint allege.d that the discriminations have diverted and will continue to divert substantial business from the respondents competitors to it, that there is a reasonable probability that the effect of the discriminations may be substantially to lessen competition and that they have a dangerous tendency unduly to hinder competition and to cre.ate a monopoly in the respondent. The follmving are among the facts in the record which are not in dispute: (1) That discounts and rebates were granted by the respondent to its customers under Schedule A and Schedule B; (2) that in many instances these discounts and rebate.es represent.ed subst.antial amounts; and (3) that the said discOlmts and rebates resulted inlowe!" net acquisition costs to some purchasers than to others whose purchases of rcspondenfs products were in such amounts that they were either not entitled to any discounts or rebates at all or they were entitled to discounts and rebates which were less than the highest percentage quantity brackets of the said schedules.

Appellant did not challenge the hearing offcer s fij1ding that there is no record support for conclusions that the adverse competit.ive effects alleged in the complaint. may result from the price differentials granted by the respondent under Schedule A "applicable to single orders or group orders of the same date. Since this finding and the ruling thereon in the initial decision have sound record basis, ,ve proceed on to a consideration of evidentiary matters relied upon by appellant in his contention that the hearing offcer erred in reaching THE YALE AND TO"\VKE :lVIA:-FACT1;RING CO, 1601 1580 Opinion similar conclusions with respect to the price discriminations inherent in the respondent' s Schedule B which provided for cumuladve volmne discounts. That schedule was as follows:

Applicable to pwcbases ofcla.ss "8" and/or I purchasesApplkablcofc1assto '.mount of discount class "IVI" equipment ' "K" aucl/or ulass KG"

eqmpmentJ'ucenC ijj A wide and variable range of the products involved in this matter is available for selection and purchase from the numerous companies which are enga.ged in their production. Some of these companies offer a long line of equipment and others specialize in trucks for designated purposes and capacities. There is great diversity between competing products in respect to engineering specifications, performance, service and parts, and this holds true even on specialized equipment offered for generally similar purposes or jobs. On some of the comparable items of equipment, price variations between the respondent and its c.ompetitors approximated 5%; but, on many others, the differences were small.

Offcials of five compet.ing manufacturers of industrial trucks and salesmen identified with two of them appeared as witnesses in this proceeding. In essence, they expressed views that respondenes cumulative discount plan would be influential in diverting business in situations where other factors were equal; that this program tended to or served to tie business to respondent; and that it has constituteel a competitive handieap. Counsel supporting the complaint contends that the hearing examiner should have concluded that substantial evidence was presented supporting inferences that price is a prime and determina. tive factor in large volume users operating through branches whose buying is carried on through a centralized purchasing offce. In support of this contention counsel directs attention to the views expressed by certain witnesses that price is frequently the paramount factor in influencing sales. No representa.tive of a national account or' other concern which was a user of the industry s products was called as a witness in the proceedings.

The hearing examiner fom1d that in the majority of cases, insteael of price, the controllng factors in inducing sales of these products were performance, engineering specifications, and related attributes 1602 FEDERAL 'fha-DE co nnSSION DECISIOXS Opinion 32 F.

including adaptability to the customers' individual requirements. This is supported by the preferences of customers' plant managers which are based on such factors and have prevailed over the inclinations of said customers' home purchasing departments to cumulate their purchases for larger discounts under Schedule B. In further corroboration of the hearing examiner s finding, there is other evidence indicating that certain of respondent' s competitors who gave no discounts have established themselves with large volume buyers in situations where respondent previously was the established supplier for those accounts. On this basjs, we reject the appellant' s contentions that the record supports conclusions that the effects of the re,spondents pricing practices may have been substantially to lessen or hinder competition or tend to monopoly.

The following excerpt from the initial decision which is a partial sunllnary of existing conditions in the Hft truck industry supports 0111' view on this phase of the matter at hand and serves to evaluate any future competitive effects which may result from respondents pricing practices:

"* * * this record affrmatively shows that in this industry in the years in que,stion there has been ease of entry, opportwlity for survival, growth, and profit, excellent consumer choice of a.ltcrnative products, effciency inprecluction and an active ra.ce for improvement of product, redesigning and the introduction of new types with supplier preference by purchasers fluidly responsive tllereto, technological a.dva.nces, and a fluidity and flexibiHty of market and of competition therein. The evidence is unanimous that competition in this industry in respondent's line of commerce is active, keen, healthy and increasing! * * * These conclusions have ample record support. The appeal does not seriously challe'11ge their basic accuracy as descriptive of thc industry :in general. However, appellant contends that they are not ma,ndatory guides in determining the legal vaHdity of the respondent's price discdminations. In maintaining that continuance of the respondent cumulative volmne discounts would represent a substantial future threat to competition, counsel in support of the complaint states that there is no way for competing manufacturers to meet the rcspondcnt pricing plan except by offering similar programs. ~While it may be inferred from the record that some of the respondent's rivals have adopted volume discount programs, it is clear that others have not. Among those in the latter category are firms who have markedly increased their business and improved their competitive positions. Counsel supporting the complaint also contends that it is inevitable that manufacturers in this industry who offer only a limited 1in!.', of THE YALE AND TOWKE NIA.',UFACTURIKG CO, 1603 1580 Opinion products will be injured ill the future, because, appellant argues volume buyers wbo desire to pool their purchases of all types of lift trucks with one full line manufacturer for the purpose of cumulating discounts will not be interested in any of their similar discolUlt programs. As previously noted, engineering design, performance, and service are of paramount importance to the producer in presenring his competitive position in this industry wherein wide diversity among competing products is traditional. There can be no doubt but that the flexibility of market factors to which the initial decision refers has included pricing matters. Illustrative of this is the initial decision s quotation from the testimony indicating that the differential between $~ 200 for a competitive truck and $3 815 for the respondent' comparable unit "is not too bad to overcome.:' It is evident, therefore that many counterbalancing forces are operative in the line of commerce in which the respondent engages.

,Ve find that the record fails to support inferences that competing producers wil not be able to meet the problems posed by respondent' pricing program ,vithout impairment of service or efficiency, or that they will be lUlable to protect their competitve positions in the face of lower prices of the pattern \'which the record shows the respondent has afforded to some of it.s customers. As previously indicated ! the appeal has not chalJengcd the fmding in the initial decision that the 5% and lesser differentials provided in the respondent' s single unit quantity discow1t program (Schedule. A) present no past or fut.ure threat to competition. This absence of injurious effects from the lower prices afforded in single unit sales of large quantity orders (Schedule A) suggests, in and of itself! that similar competitive factors may be largely operative with respect to the comparable rebate differentials applicable to orders to which the cumulative discount is applied (Schedule B). ,Ve therefore reject the contentions of counsel supporting the complaint that the record supports the inference that a continuancc of the challenged pricing practices of the respondent wil probably result in the adverse effects upon competition which are proscribed by the statute.

Although it was found in the initial decision that the role which is played by prices in this industry in inducing sales had been comparatively subordinate in a majority of cases, that conclusion does not necessarily mean that price has not influenced the placing of business in individual competitive situations. In contending that the initial decision is based on an erroneous construction of the Act, the appellant argues that a showing that a seller s discriminations are suffcient to divert business from his competitors suffces to establish a prima facie case of law violation and that., even assuming that the evidence fails .

1604 FEDERAL TIL- CO:\I::vnSSIOX DJ CISIONS Findings 52 ll 1'. C, to show actual diversion of business to respondent! such circumst.ance does not render the record deficient. In support of this proposition of lavi, t.he appellant relies on the fact that the statute does not require a sho\ving that price discriminations have, in fact, injured competition but requires only a sha-wing that there is a reasonable probability that they may have that sheet.

This latter concept! which is sonIld, does not support the proposition, however, that conclusive inferences may be drawn from isolated evidentiary facets of the case without consideration of those which may be drawn from the entire record. If the particular circumstances attending the discriminations refute conclusions that the proscribed adverse effects may result! the statutory requirement.s of proof or injury have not been met. The proponent of the complaint has the burden or meeting these standards in proving competitive injury; and! where the burden has not been sustained in the course or the case-in -chief by counsel supporting the com plaint! the proceed lng should be dismissed. The Administrative Procedure Act provides that Except as statutes otherwise provide! the proponent or a rule or order shad have the burden of proof. " (5 U. , Sec. 1006(c). Also see Norment v. Hobby, 124 F. Supp. 489; National Labor Rela- 737;tions Board v. Iladdock-Enginee1' , Limited 215 F. 2d 73'1, TurnrMcKivcr v. Theo. Harnrn B1'ewing 00. 297 W. 445 , 447; , 348; Rupp v. Gua1'dian LifeOentmlMut. Ins. Assn. J83 S.W. 2d347 , 128; State v. Pl'essleT 92 P. 806Ins. 00. of America 170 S:W. 2d 123 v. Rich 7 N.E. 776.808 ; Walker v. Oarpenter 57 S.E. 461; Wilett Sec. 2 (b) of the Clayton Act, as amended (5 L. A. 13 (b)) provides affrmatively that the initial burden is on counsel supporting the complaint.

Another alleged ground or error relates to \vhether the hearing examiner, when considering the motion to dismiss, failed to view the evidence and draw inferences therefrom most favorable to the complaint in a manner consonant with criteria approved for such determinations in the interlocutory stages or cases under the Commission decisions in the matter of Vu.zcanized Rubber and Plactics Oompany, Docket No. 6222 (issued 11 ovembcr 29, 1955). The initial decision was filed herein on November 18, 1955. The two basic principles of Jaw which the Commission has deemed controlling in jts rulings on the merits of counsel '8 appeal arc (1) that proof of tendency or capacity of a. seller s price discriminations to divert business to him rrom his competitors is not in every situation proor per se of unlawful injury to competition with the seller, and (2) that in determining the .merits of motions to dismiss! inferences by hearing offcers respecting the THE YALE AND TO'VKE MA.,TUFACTURI:\7G CO. J605 1580 Order probable future effects of a seller s price discriminations on his competition should be those reasonably to be drawn from the entire record. vVe deem the inferences drawn by the hearing examiner on the salient points of the case to be reasonable and proper inferences. Hence, no useful purpose would be served by a detailed evaluation of the extent to which the hearing examiner s appraisals of evidentiary matters relating to each of the various issues in the proceeding mayor may not have been predicted on inferences most favorable to the complaint. Because we think that the record lacks reliable evidence which, when considered in connection with inferences reasonably to be drawn therefrom, would support an order to cease and desist. this aspect of the appeal is likewise denied. The testimony of two witnesses connected with a competitor of the respondent pertained to their conversations with purchasing offcials of six large volume buyers in which the witnesses assertedly were informed that their company could not hope for future orders or would experience reduced business unless they adopted a cumulative discount plan comparable to the respondent's. The hearing examiner referred to this testimony as hearsay evidence and stated in effect that testimony by the purchasing age.nts themselves, had it been ofrered would have greater probative value in determining the attit.udes of respondent' s customers toward its cumulative volume discounts. In furt.her commenting on this testimony, the hearing offcer cited matters which he believed detracted from its weight and raised serious questions as to candor and credibility. Appellant argues that such testimony alone warranted denial of the motion to dismiss. This testimony was properly received into the record and came within one of t.he recognized exceptions to the hearsay rule. I-Iowever the hearing offcer apparently was not persuaded that purchasing offcials are completely free at al1 times from motives of seh-interest when conversing \with representatives of present or former suppliers and none of the matters cited in the appeal is persuasive that his evaluations on matters of credibility were essentially inaccurate. For these reasons and others previously noted as controlling to our decision here, the exceptions relating to this aspect of the appeal arc likewise denied.

Having determined that the appeal is without merit, the initial decision is adopted as the decision of the Commission. FINAL ORDER Counsel supporting the complaint having fied an appeal from the hearing examiner' s initial decision granting the motion to dismiss IMISSIOX DECISIONS1606 FEDERAL TRADE Order 52 F.

filed by the respondent at the close of the case in chief; and this matter having come on to be heard upon the record! including the briefs and oral arglillBnts of counsel; and the Commission having rendered its decision denying said appeal and adopting the initial decision as the decision of the Commission:

It is ordered That the complaint herein be, and it hereby is, dismissed.

H. .J. HEINZ CO. ET AL. 1607 Appearances