The Borden Company

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IN THE MATTER OF THE BORDEN COMPANY ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2 (a) OF THE CLAYTON ACT Docket 6737. Complaint, Mm" 1957-Decision, Nov. 13, 1957 Consent order requiring a manufacturer and processor of fluid milk and other dairy products and two of its subsidiaries-one the successor of the other in handling such products in the areas concerned and with an annual business therein of approximately $14 OOO OOO-to cease discriminating in price in violation of Sec. 2(a) of the Clayton Act through charging customers in 'Vilmington, Del., for fluid milk prices substantially lower than those charged customers in Pennsylvania and New .Jersey, and also through giving favored customers cash purchase discounts of 2%. Before 111r. Frank Bier hearing examiner. ill r. Le'Lois F. Depro for the Commission. ilf1' . Cecil 1. CrO'Ltse and Dewey, Ballantine, Bushby, Palmer vVood by flir. John E. F. lVood of New York City, for The Borden Co.

by 1111'. Daniel Lowenthal Fox, Rothschild, O'B1'ien Frankel Philadelphia, Pa., for Sylvan Seal :Milk, Inc. and 612 Corporation. COl\IPLAINT The Federal Trade Commission, having resaon to believe that the parties respondent named in the caption hereof, and more particularly designated and described hereinafter, have violated and are now violating the provisions of Section 2 (a) of the Clayton Act (D. C. Title 15, Sec. 13) as amended by the Robinson-Patman Act approved June 19 , 1936, hereby issues its complaint stating its charges with respect thereto as follows:

PARAGRAPH 1. , Respondent The Borden Company, sometimes hereinafter referred to as respondent Borden, is a corporation organized and existing Ender the laws of the State of New Jersey, with its principal office and place of business located at 350 :Madison Avenue, New York, New York.

Respondent Sylvan Seal :Milk, Inc., sometimes hereinafter referred to as respondent Pennsylvania corporation, is a corporation organized and existing under the laws of the State of Pennsylvania with its principal oflice and place of business located at 612 South 24th Street, Philadelphia, Pennsylvania. Said respondent was incorporated on April 13 , 1956.

564 :FEDERAL TRADE COMMISSION DECISIONS Complaint 54 F.

Respondent 612 Corporation, sometimes hereinafter referred to as respondent Delaware corporation, is a corporation organized and existing under the laws of the State of Delaware, with its principal office and place of business located at 612 South 24th Street, Philadelphia, Pennsylvania. Said respondent was incorporated in J anuary 1932, as Sylvan Seal l\lilk, Inc., and on or about ~lay 1 , 1956 its name was changed to 612 Corporation.

PAR. 2. Respondent Borden has been and is now engaged, throughout the United States, in the purchase, manufacture, processing, sale and distribution of fluid milk and other dairy products iilcluding, but not limited to, cheese, cream, buttermilk, chocolate milk and lee cream.

respondent 612 Corporation, under the name of Sylvan Seal :Milk Ine., a Delaware corporation, from 1932 to 1956, has been engaged in the purchase, manufacture, processing, sale and distribution of fluid milk and other dairy products. Its plant has been and is now located at (H2 South 24th Street, Philadelphia, Pennsylvania. Respondent Pennsylvania corporation has been since on or about l\lay 1 , 1956, and is now operating the business of the purchase manufacture, proeessing, sale and distribution of fluid milk and other dairy products, ,which business prior to that time was operated by respondent Delaware corporation.

Said respondents hate sold and distributed and respondents Borden and Pennsylvania corporation 11mv sell and distribute fluid milk and other dairy products, at wholesale, to supermarkets and other retail outlets including grocery stores. The annual sales of respondents Delaware and Pennsylvania corporations have approximated $14 000 000.

PAn. 3. As a result of negotiations beginning in 1955, respondent Borden on or about April 13, 1956, acquired ownership and control of Sylvan Seal l\lilk, Inc. , of Dela,,-are, through the acquisition of all property, assets and rights of the latter, and on or about :May 1 1956, caused the name of the said Sylvan Seal l\lilk, Inc., of Dela ware to be changed to respondent 612 Corporation. Also on or about ?\lay 1 , 195G, respondent Borden caused to be orgflllized under the la,,-s of the State of Pennsylvania the. respondent Sylvan Seal ?\Iilk, Inc., of Pennsylvania, which is a wholly mvnecl and control1ecl subsidiary of respondent Borden. The business formerly eonc1nc.ted by Syhan Seal l\Iilk, Inc. , of Delaware has been since about ~Jay 1 , 1956, conducted by respondent Sylvan Seal l\Iilk, Inc., of Pennsylvania. Hesponclent Borden has through ownership of the business exercised authority and con- THE BORDEN COMPANY ET AL. 565 563 Complaint trol over said business by formulating and directing the policies and operations thereof, and has entered into contracts with the principal officers of the said Sylvan Seal :Milk, Inc., of Delaware, providing for their employment by respondent Borden and their continuation in the business.

PAR. 4. Respondents in the course and conduct of their said business are engaged in commerce as "commerce" is defiJ1ed in the Clayton Act in that they sell and distribute fluid milk and other dairy products to purchasers thereof located in states other than the state of origin of shipment and cause such products when sold, to be shi pped and transported from their place of business in the state of origin to purchasers located in other states. There is now and has been a constant course and flow of trade and commerce in such products behyeen respondents in the state of origin and purchasers located in states other than the state of origin and respondents are therefore, subject to the jurisdiction of the Federal Trade CommlsslOn.

PAn. 5. In the course and conduct of their said business respondents ha.ve been, and respondents Borden and Pennsylvania corporation are nO\Y, in competition with others in the sale and distribution in commerce of fluid milk and other dairy products, except as such competition has been substantially lessened by the pricing practices of respondents hereinafter alleged. Some of the responclents~ customers are in competition with each other a.nd with customers of competitors of respondents in the purchase and resale of fluid milk and other dairy products. PAR. 6. Respondents, either directly or indirectly, have been and respondents Borden and Pennsylvania corporation are now discriminating in price between different purchasers of fluid milk by selling such products to some purchasers at substantially higher prices than they sen such products of like grade and quality to other purchasers some of \""\"hom are engaged in competition with the less favored purchasers in the resale of such products. For example, since about June 1055 , respondents have charged and respondents Borden and Pennsylva.nia corporation do now charge, prices for the sale of fluid milk in half gallon and quart containers in the \Vilmington, Delaware, area which prices have been and are lower than those charged by said respondents for the sale of fluid milk of like grade and quality to purehasers in PennsylYa.nia and New ~Tersey. Such difi'erenees in price hn,ve ranged as high as 5 to 7V:~ cents per half gallon or, on a quart basis, from 2V2 to 33h cents per quart.

Decision 54 F.

As of October 1956, respondents Borden s and Pennsylvania corporation s prices for fluid milk in the 'Vilmington area were '7 cents less per half gallon than for the same quantity of fluid n1ilk of like grade and quality sold to purchasers in Pennsylvania. PAR. 7. Respondents have further discriminated, and respondents Borden and Pennsylvania corporation do now discriminate, in price bebveen purchasers by granting discounts for cash of 2% for the sale of fluid milk of like grade and quality to some purchasers and not to others, some of whom, though not receiving the benefit of the cash discount, are nevertheless in competition in the resale of such milk with some of those purchasers who do receive the benefit of a lower price in the form of cash discounts. PAR. S. The discrimination in price on the part of respondents being substantial, it is allege,d that the effect thereof may be substantially to lessen competition and to tend to create a monopoly in the respective lines of commerce in which respondents and the purchasers recei,-ing the preferential prices are engaged and to tend to prevent, injure and destroy competition between respondents and their competitors and between and among purchasers of such fluid milk from respondents.

PAIL 9. The discriminations in price, as hereinbe.iore alleged, are in vioJatjon of the provisions of Section 2 (a) of the Clayton Act., as amended by the Robinson-Patman Act.

IKITL:\L DECISION BY FRANK Iller, HEARING EXA~nner Pursuant to the provisions of the Clayton Act, subsection (a) of section 2 (D. C. Title 15, Sec. 13), as amended by the R.obinson- Patman Act, the Federal Trade Commission on :March 8 , 1957 , issued and subsequently served its complaint in this proceeding against respondents The Borden Company, a corporation existing and doing business under and by virtue of the Jaws of the State of New J ersey, with its oflic.e and principal place of business located at 350 l\lac1ison Avenue, New York, New York; Sylvan Seal :Milk, Inc., a corporation existing and doing business under and by virtue of the laws of the State of Pennsyhania; and 612 Corporation, a corporation existing and doing business under' and by virtue of the laws of the State of Dela"ware. The ofllce and principal place of business of the last two named respondents is at 612 South 24th Street Philadelphia, Pennsylvania.

On September 25 , 1957, there "Was submitted to the undersigned he,aring examiner an agreement beb,een respondents and counsel supporting the complaint providing for the entry of a consent or~ del'. By the terms of said agreement, respondents admit all the jurisdictional facts alleged in the complaint and agree that the , 'I' HE BORDEN COMPANY ET AL. 567 563 Order record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations. By such agreement respondents waive any further procedural steps before the hearing examiner and the Commission; waive the making of findings of fact and conclusions of law; and waive all of the rights they may have to challenge or contest the validity of the order to cease and desist entered in accordanee with this agreement. Such agreement further provides that it disposes of all of this proceeding as to all partjes; that the record on which this initial decision and the decision of the Commission shan be based shan consist solely of the compla.int and this agreement; that the latter shall not become a part of the official record unless and until it becomes a part of the decision of the Commission; that the agreement is for settlement purposes only and does not constitute an admission by respondents that. they have violated the law as alleged in the complaint; and that the following order to cease and desist may be entered in this proceeding by the Commission without further notice to respondents and hen so entered, it shall have the same force and effect as if entered after a full healing, a.nd may be altered, modified, or set aside in the manner provided for other orders; and that the comphint may be used in construing the terms of the order. The hearing examiner having considered the agreement and proposed order, and being of the opinion that they provide an appropriate basis for settlement and disposition of this proceeding, the agreement is hereby accepted, the foliowing jurisdictional findings made, and the following order issued.

1. Re.ponclent The Borden Company is a corporation existing and doing business under and by virtue of the laws of the State of New Tersey, ",ith its office and principal place of business located at 350 ~Indison Avenue, ~ ew York, New York.

Respondent Sylvan Seal :Milk, Inc.., is a corporation existing and doing business under and by virtue of the laws of the State of Pennsylvania, with its office and principal place of business located at 612 South 24th Street, Philadelphia, Pennsylvania. Respondent 612 Corporation is a corporation existing and doing business under and by virtue of the. laws of the State of Delaware with its office and principal place of business located at 612 South 24th Street, Philadelphia, Pennsylvania.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents. ORDER It is ordc?'Nl. That. respondents Sy han Seal ~Iilk, Inc. , a Corporation, and GIg Corporation, a. corporation and their successors or Decision 54 F.

assigns, and their respective officers, representatives, agents and employees, directly or through any corporate or other device, in connection ",ith the sale of fluid milk in commerce, as "commerce" is defined in the Clayton Act, do forthwith cease and desist from discriminating in price by selling fluid milk of like grade and quality to any purchaser at a price which is lower than the price charged any other purchaser in the same line of commerce: (1) ,Yhere such lower price undercuts the price at which the purchaser charged the lo"\\er price may purchase fluid milk of like grade and quality from another seller; or (2) ,Vhere any purchaser who does not receive the benefit of the lmyer price does in fact compete in the resale of such product with the purchaser "\\ho does receive the benefit of the lo"\\er price. It is further onlered That respondent The Borden Company, a corporation, and its officers, representatives, agents and employees directly or through any corporate or other device, do forthwith cease and desist from directing or suggesting or participating in any conduct, on the part of respondent Sylvan Seal :Milk, Inc. or respondent 612 Corporation or their sueeessors or assigns, and their respective officers, representatives, agents and employees, constituting a violation of this order.DECISION OF THE CO:\DIISSION ~\ND .onder TO FILE nEPORT OF COMPLIANCE Pursuant to Sec. 3.21 of the Commission s Rules of Practice, the initial decision of the hearing exmniner did, on the 13th day of November, 1957, become the decision of the Commission; and accordingly:

It is 01'dered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a ;eport in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist. BEN HUNDLEY 569 Decision