Crosse & Blackwell Co.

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In tour MatTTER OF CROSSE & BLACKWELL CO.

‘ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2(d) OF THE CLAYTON ACT Docket 6468. Complaint, Nov. 21, 1955—Decision, May 8, 1958 Order requiring a producer of a wide variety of food products, with annual sales amounting to approximately $14 million, to cease violating section 2(d) of the Clayton Act by making payments for advertising or other services in connection with the sale of its products to certain food chains without making such allowances available on proportionally equal terms to all their competitors.

Mr. Andrew C. Goodhope, Mr. Fredric T. Suss and Mr. Alvin D. Edelson for the Commission.

Niles, Barton, Yost & Dankmeyer, of Baltimore, Md. and Agr. James W. Cassedy, of Washington, D.C. for respondent. InrTIAL DECISION BY Frank Hier, Hearing Examiner. This proceeding began with complaint, which issued November 21, 1955, charging the respondent with having made payments of advertising allowances to some of its customers while neither offering or paying similar or proportionate advertising allowances to others of its customers competitively engaged with the recipients in the resale of respondent's products, all in violation of subsection (d) of section 2 of the Clayton Act (U.S. Title 15, sec. 13). Thereafter, initial hearing having been scheduled February 6, 1956, and subpena duces tecum having been served upon respondent's appropriate official for production of books and records indicating the advertising payments alleged, respondent moved to quash said subpena, which the undersigned denied on January 20, 1956, and thereafter on January 28, 1956, respondent filed a motion for a bill of particulars and dismissal of the complaint. Both of these motions were denied by the undersigned hearing examiner on January 25, 1956, whereupon respondent appealed the denial of its motion to quash subpena duces tecum to the Commission, which appeal the Commission, on March 15, 1956, denied. On February 7, 1956, respondent filed its answer to the complaint, and hearing for the reception of testimony and evidence was again fixed for March 28, 1956, the subpena previously served being made returnable at that time.

At this hearing the president of respondent appeared in response to the subpena but refused to produce the documents, books and records Decision 54 F.T.C.

called for therein, asserting that the Federal Trade Commission had no authority under its act or under the Clayton Act to issue and require the production of documentary evidence in a case involving alleged violation of the Clayton Act.

Thereafter counsel supporting the complaint, in the name of the Commission, brought an original action in the United States District Court of Baltimore against the president of the respondent, in accordance with the appropriate provisions of the Federal Trade Commission Act, which action resulted in a decision upholding the authority of the Federal Trade Commission to issue a subpena duces tecum for the enforcement of the Clayton Act (F.7.C. v. Afenzies, 145 F. Supp. 164). Thereafter the defendant in that case appealed to the United States Cireuit Court of Appeals for the Fourth Circuit for reversal of the judgment of the District Court which, after argument, consideration, briefs and facts, affirmed the judgment below on March 7, 1957. Thereafter, within the time allowed, petition for certiorari to the Supreme Court of the United States was filed by defendant in this case and denied.

Hearing was again set June 18, 1957, but prior thereto, on Alay 27, 1957, respondent filed a motion to dismiss the entire proceeding on the ground that it was subject to the exclusive jurisdiction of the Secretary of Agriculture by virtue of exclusionary provisions of both section 5(a)(6) of the Federal Trade Commission Act (15 U.S.C. sec. 45) and the Packers and Stockyards Act of 1921 (7 U.S.C. sec. 227). After a brief hearing on facts in support of this motion only, and consideration of briefs and arguments, complaint was dismissed by the undersigned in an initial decision dated August 2, 1957. Prompt appeal to the Commission was there upon filed and presecuted by counsel in support of the complaint, and the Commission on consideration of the record, briefs, and arguments, on November 13, 1957, reversed the dismissal and remanded the proceeding to the undersigned for further proceedings in accordance with that opinion. Thereafter the case was set down for the fourth time for trial to begin February 17, 1958, but prior thereto, on January 30, 1958, in order to avoid the expense and time incident to trial on the merits, counsel in support of the complaint and counsel for respondent entered into a stipulation on the record at a special hearing held for that. purpose which stipulation provides in substance that counsel supporting the complaint has available substantial evidence, both testimonial and documentary, which if received in evidence would sustain all of the factual allegations of the complaint, and that respondent does not contradict such proof, respondent expressly reserving, however, its CROSSE & BLACKWELL Co. 1571 1569 Findings claim that it is under the exclusive jurisdiction of the Seeretary of Agriculture and that the Federal Trade Commission has no jurisdiction of the cause of action. In addition it was stipulated that without further notice the undersigned and the Commission could proceed to make findings of fact. draw conclusions and enter an appropriate order as though such evidence was in the record. In accordance with this stipulation, and on the entire record, the hearing examiner makes his following findings of fact. 3 FINDINGS OF FACT Respondent Crosse & Blackwell Co. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Maryland, with its office and principal place of business located at 6801 Eastern Avenue, Baltimore, Md. Respondent is now and has been engaged in the business of producing and selling a wide variety of food products. Respondent sells approximately 150 products under the brand name “Crosse & Blackwell” and approximately 85 products under the brand name “Weiller.” The principal items produced and sold by respondent are canned nut rolls, marmalades, soups, tomato products, pickles, and rehshes. Respondent sells its products through food brokers and distributors, and, in addition, sells its products direct to customers who sell at retail, including retail chain store organizations. Sales made by respondent of its products are substantial, amounting to approximately $14 million annually.

In the course and conduct of its business, respondent has engaged and is now engaging in commerce, as ‘commerce’ is defined in the Clayton Act, as amended. Respondent ships its products, or causes them to be transported, from its principal place of business located in the State of Maryland to customers located in the same and other States of the United States and the District. of Columbia. In the course and conduct of its business in commerce, respondent. has paid, or contracted for payment of, something of value to or for the benefit. of some of its customers as compensation cr in consideration for services or facilities furnished by or through such customers in connection with their offering for sale or sale of products sold to them by respondent, and such payments were not made available on proportionally equal terms to all other customers competing in the sale and distribution of respondent’s products. For example, during the year 1955 respondent contracted to pax and did pay $100 to the Giant Food Shopping Center, Inc., Washington, D.C., and $2,100 to the Food Fair Stores, Inc., Philadelphia, Opinion 54 FT.

Pa., as compensation or as an allowance for advertising or other service or facility furnished by or through Giant Food Shopping Center, Inc., and Food Fair Stores, Inc., in connection with their offering for sale or sale of products sold to them by respondent. Such compensation or allowance was not offered or otherwise made available by respondent on proportionally equal terms to all other customers competing with Giant Food Shopping Center, Inc., or Food Fair Stores, Inc., in the sale and distribution of respondent’s products. CONCLUSION The acts and practices of the respondent, as alleged above, violate subsection (d) of section 2 of the Clayton Act, amended by the Robinson-Patman Act.

ORDER Jt 1s ordered, That respondent Crosse & Blackwell Co., a corporation, its officers, employees, agents and representatives, directly or through any corporate or other device, in or in connection with the sale of canned nut rolls, marmalades, soups, tomato products, pickles, relishes and other products in commerce, as “commerce” is defined in the aforesaid Clayton Act, as amended, do forthwith cease and desist from:

Making or contracting to make, to or for the benefit of any customer, any payment of anything of value as compensation or in consideration for any advertising or other services or facilities furnished by or through such customer, in connection with the handling, offering for resale, or resale of canned nut rolls, marmalades, soups, tomato products, pickles, relishes, and other products sold to him by respondent, unless such payment is affirmatively offered or otherwise made available on proportionally equal terms to all other customers competing in the distribution or resale of such canned nut rolls, marmalades, soups, tomato products, pickles, relishes, and other products. OPINION OF THE COMMISSION By Gwynne, Chairman:

Respondent is charged with violation of section 2(d) of the amended Clayton Act by the giving of illegal advertising allowances. During the proceedings herein, respondent filed a motion to dismiss the case on the ground that it was subject to the exclusive jurisdiction of the Secretary of Agriculture by virtue of section 5(a)(6) of the Federal Trade Commission Act and the Packers and Stockyards Act of 1921. The hearing examiner sustained the motion and dismissed the complaint.

CROSSE & BLACKWELL CO. 15738 1569 Order On appeal, the Commission reversed the holding of the hearing examiner and remanded the case for further proceedings. Counsel for both parties have now entered into a stipulation disposing of the case without a trial on the merits and making it unnecessary to introduce evidence in support of the complaint. The hearing examiner accordingly made findings of fact, conclusion of law and entered an order against respondent.

Respondent’s appeal raises only the issue as to whether jurisdiction over the acts and practices charged against respondent in the complaint is exclusively in the Secretary of Agriculture, and that the Federal Trade Commission is without jurisdiction. The Commission considered this question in the previous appeal of respondent and the opinion filed therein sets out our views.

The findings, conclusion and order of the hearing examiner are adopted as the findings, conclusion and order of the Commission. For the reasons set. out in our previous opinion, respondent’s appeal is denied, and it is directed that an order issue accordingly. FINAL ORDER This matter having been heard by the Commission upon respondent’s appeal from the hearing examiner’s initial decision filed February 6, 1958, including briefs in support thereof and in opposition thereto; and the Commission having rendered its decision denying the appeal and adopting the initial decision as the decision of the Commission: It is ordered, That respondent shall, within sixty (60) days after service upon it of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with the order to cease and desist contained in the aforesaid initial decision.

Complaint ot F.T.C.