Point Adams Packing Co.

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IN THE MATTER OF POINT ADA:\1S PACKING CO., ET AL.

SENT ORDER, E'IC" IN REGARD TO THE ALLEGED VIOLATION OF SECS. 2(c) A!'' D 2(d) OF THE CLAYTON ACT Docket 7210. C01iplaint, July 1958--Decision, Dec. 5, 1.958 Consent order requiring a canner of sea food products in Hammond, are. and a DrokeI' in New York City, to cease violating the brokerage section of the Clayton Act by reducing the net price to certain buycrs by reduction of brokerage, by passing on payments out of brokerage as rebates for part of advertising 01' promolional allowances, and by passing on a part of the brokerage by agreement between the seller and broker to share one-half of price reductions granted in the form of promotional ahowaDces; and to cease violating' Sec. 2(d) of the Act by making special advertising allowances to certain favored customers but not to their competitors.

COMPLAINT The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof, and hereinafter more pariicularly designated and described, have been and are now violating the provisions of subsection (c) and (d) of , Sec.Section 2 of the Clayton Act, as amended (U. C. Title 15 J 3), hereby issues its complaint, stating its changes with resped thereto as follows:

Count I PARAGRAPH 1. Respondent Point Adams Packing Co. , hereinis aafter referred to as Point Adams or as seller respondent, corporation organized, existing and doing- business under and by virtue of the Jaws of the State of Oregon, with its principal offce and place of business located at Hammond, Oreg. Respondent Point Adams has been for the past several years, and is now engaged in canning, packing, selling and distributing salmon tuna and crab meat, al1 of \which are hereinafter referred to as seafood products. Seller respondent is a substantial distributor of seafooe! products, particularly Columbia River Sa1n1on. Respondent Charles L. Hagel's, Sr. , is an individual and is president and general manager of the seller respondent, with his principal offce and place of business the same as that of the seller respondent. Respondent Rogers owns a substantial amount of the outstanding capital stock of the seller respondent, and as POINT ADAMS PACKING CO., ET AL. 853 852 Complaint president and general manager and as substantial owner, exercises authority and control over the seller respondent and its business practices and policies, inclufling its sales and distribution policies. He is included in any reference hereinafter made to seller respondent.

PAR. 2. Respondent Trubenbach & SchefIold, Inc., hereinafter sometimes referred to as the broker respondent, is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its principal offce and place of business located at 100 Hudson Street, New York, N. Y. Respondent is now and for the past several years has been engaged in the brokerage business representing a number of West Coast packers of fruit, vegetable and seafood products, including respondent Point Adams Packing Co.

Respondents Edward H. Trubenbach and Joseph W. SchefIold are individuals and are president and vice president, respectively, of the broker respondent, with their principal offce and place of husincss the same as that of said broker respondent. These individual respondents own all or substantially all of the outstanding stock of said broker respondent, and as offcers and owners exercise authority and control over its business practices and policies, including its sales and distribution policies. They are included in any reference herein&after made to broker respondent. PAR. 3. In the course and conduct of their businesses, respondents, both seller and broker, for the past several years have sold and distributed, and are now selling and distributing seafood products in commerce, as "commerce " is defined in the aforesaid Clayton Act, to buyers located in the several states of the United States, other than the states in which respondents are located. Said respondents transport, or cause such seafood products \vhen sold, to be transported from their place of business or warehouse in the State cf Washington, or elsewhere, to buyers or to the buyers ' customers located in various other States of the United States. There has been at all times mentioned herein a continuous course of trade in commerce in said seafood products across state lines between respondents and the respective buyers of said products.

PAR. 4. The seller respondents, both corporate and individual for the past several years have sold and distributed, and are now selling and distributing, their seafood products in commerce to buyers through brokers, The seller respondents pay these brokers, including the broker respondents named herein, for their Complaint 55 F.

services in effecting such sales, a brokerage or commission usually at the rate of 5 percent of the net selling price of the product, except for crab meat which is usual1ly at the rate of 2 /2 percent of the net selling price.

In a number of instances, however, both the seller respondents and the broker respondents, in the course and conduct of their business, have made payments, grants, allowances or rebates in substantial amounts in lieu of brokerage or have made price concessions which refiect brokerage to certain buyers. Among and including, but not necessarily limited to, the methods or means employed by respondents in so doing are the following:

(a) By reducing the net price to certain buyers on which sales the brokerage or commission to the broker was reduced by approximately the same amount as the price reduction. (b) By the broker respondents passing on to certain buyers out of their brokerage earned or received, in the form of rebates or other payments for part of advertising or promotional allowances agreed to by and between the seller and the broker respondents.

(c) By the broker respondents passing on to certain buyers a part of their brokerage or commissions earned or received by agreeing with the seller respondents to share one-half of certain reductions in price granted to said buyers in the form of promotional allowances.

PAR, 5, The acts and practices of both the seller respondents and the broker respondents, both corporate and individual1 , as herein alleged and described constitute a violation of the provision of subsection (c) of Section 2 of the Clayton Act, as amended (U. C. Title 15, Sec. 13).

Count II PAR. 6. Each of the allegations contained in paragraphs 1 and 3 of this complaint, insofar as they pertain to the seller respondent, are here rea1leged and incorporated in this count thc same as if they were set forth in full PAR. 7. The sc1ler respondents both corporate and individual in the course and conduct of their business, have been and are now paying advertising and promotional allowances to certain favored buyers \vithout making such allowances available on proportionally equal terms to al1 other buyers competing in the distribution of their products.

POINT ADAMS PACKING CO., ET AL. 855 852 Dccision For example the seller respondents have agreed to payments being made to at least one favored customer in the State of Pennsylvania as a special advertising or proportional allowance without agreeing to such payments being made available on proportionally equal terms or in fact on any terms, or in any amounts to other customers competing with the favored customer in the resale of the seller respondents' products. These payments were made hy seller respondents on a fiat monthly basis for a certain period of time at the rate of $50 per month. No such payments were made or even offered on proportionally equal terms or in fact on any terms to cllstomers competing with the favored customer in t.he resale of the seller respondents' products. Another example of such practice occurred in the State of New Jersey where the seller respondents agreed to a fiat payment of $750 as a special advertising allowance to one favored customer without agreeing to such payment being made on proportionally equal terms to other customers competing with the favored customer in the resale of the seller respondents' seafood products. Two-thirds of this amount, or $500, was paid by the seller respondents and the other one-third, or $250 , was paid by the broker respondents out of their brokerage. No such payments were made on proportionally equal terms or amounts, nor \verc any offered to customers competing with the favored customer in the resale of the seller respondents' seafood products. PAR. 8. The acts and practices of the seller respondents, both corporate and individual, as hereinabove alleged and described constitute a violation of t.he provisions of subsection (d) of Section 2 of the Clayton Act, as amended (D. , Title 15, Sec. 13). M'l. Cecil G. Miles for the Commission. M'l. Milton Lang, of New York, N. , for respondents. INITIAL DECISION BY LOREN H. LAUGHLIN, HEARING EXAMINER The Fedel"al Trade Commission (sometimes also hereinafter referred to as t.he Commission) issued its complaint herein, charging the above-named respondents with having violated the provisions of subsections (c) and (d) of Section 2 of the Clayton Act, as amended (D. C. Title 15, Sec. 13). The respondents were duly served with process and the initial hearing canceled pending negotiations for settlement between the parties. On October 10, 1958, there was submitted to the undersigned hearing examiner of the Commission for his consideration and Decision 55 F.

approval an "Agreement Containing Consent Order to Cease and Desist " which had been entered into by and between respondents and the attorneys for both parties, under date of October 9 1958, subject to the approval of the Bureau of Litigation of the Commission. Such agrecmcnt had been thereafter duly approved by that Bureau.

On due consideration of the said "Agreement Containing Consent Order to Cease and Desist " the hearing examiner finds that said agreement, both in form and in content, is in accordance with S3.25 of the Commission s Rules of Practice for Adjudicative Proceedings, and that, by said agreement, the parties have specifically agreed that:

1. Respondent Point Adams Packing Co. , is a corporation existing and doing business under and by virtue of the laws of the State of Oregon, with its offce and principal place of businc," located in the town of Hammond, State of Oregon. Respondent Charles L. Rogers, Sr., is an individual and is an offcer of respondent Point Adams Packing Co. , with his offce and principal place of business located in the town of Hammoncl State of Oregon.

Respondent Trubenbach & Schcffold, Inc" is a corporation existing and doing business under and by virt.ue of t.he laws of the State of New York, with its offce and principal place of business located at 100 Hudson Street, in t.he city of New York, State of New York.

Respondent.s Edward H. Trubenbach ,end Joseph W. Scheff old are individuals and are offcers of respondent Trubenbach SchefIolr1. Inc., wit.h t.their offce and principal place of business located at. 100 Hudson Street in the cit.y of New York, State of New York.

2. Pursuant to the provisions of subsections (c) and (d) of Section 2 of the Clayt.on Act, as amended (D. , Title 15, S13), the Federal Trade Commission, on .July 23 , 1 D58 issued its complaint in this proceeding against respondents, and a true copy was thereafter duly served on respondents.

3. Respondent.s admit all the jurisdictional fact.s alleged in the complaint and agree that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations.

4. This agreement disposes of all of this proceeding as to all parties.

POINT ADAMS PACKING CO., ET AL. 857 852 Decision 5. Respondents waive:

(a) Any further procedural steps before the hearing examiner and the Commission;

(b) The making of findings of fact or conclusions of law; and (c) All of the rights they may have to challenge or contest the validity of the order to cease and desist entered in accordance with this agreement.

6, The record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and this agreement.

7. This agreement shall not become a part of the ofYjcial record unless and until it becomes a part of the decision of the decision of the Commission.

8. This agreement is for settement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint. 9. The following order to cease and desist may be entered in this proceeding by the Commission without further notice respondents. When so entered it shall have the same force and effect as if entered after a full hearing. It may he altered modified, or set aside in the manner provided for other orders. The complaint may be used in construing the terms of the order. Upon due consideration of the complaint filed herein and the said Agreement Containing Consent Order to Cease and Desist the latter is hereby approved, accepted and ordered med, the same not to become a part of the record herein, hmvever, unless and until it becomes a part of the decision of the Commission. The hearing examiner finds from thc complaint and the said Agreement Containing Consent Order to Cease and Desist" that the Commission has jurisdiction of the subject matter of this procecding and of the persons of each of the respondents herein; that the complaint states a legal cause for complaint under the Clayton Act, as amended, against each of the respondents both generally and in each of the particulars alleged therein; that this proceeding is in the interest of the public; that the folJov.:ing order as proposed in said agreement is appropriate for the just disposition of all of the issues in this proceeding as to all of the parties hereto; and that said order therefore should be and hereby is, entered as follows:

Order 55 F.

ORDER It is ordend That Point Adams Packing Co., a corporation and its offcers, and Charles L. Rogers, Sr., individually and as an offcer of said corporation, and respondents' agents, representatives, or employees, directly or through any corporate or other device in connection with the sale of seafood products in commerce, as "commerce " is defined in the aforesaid Clayton Act do forthwith cease and desist from:

1. Paying, granting, or allowing, directly or indirectly to any buyer, or to anyone acting for or in behalf of, or who is subject to the direct or indirect control of such buyer, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, upon or in connection with any sale of seafood products to such buyer for his own account. 2. Making or contracting to make, to or for the benefit of any customer, anypayn1ent of anything of value as compensation or in consideration for any advertising or promotional allowances or other services or facilities furnished by or through such customer, in connection with the handling, offering for resale, or resale of seafood products sold to him by respondents, unless such payment is affrmatively offered or otherwise made available on proportionally equal terms to a1J other customers competing in the distribution or resale of such seafood products. It is further o1de1' That Trubenbach & Seheffold, Inc. , a corporation, and its offcers, and Edward II. Trubenbach and Joseph W. ScheffoJd, individual1Jy and as offcers of said corporation, and respondents ' agents, representatives, or employees directly or through any corporate or other device in connection with the sale of seafood or other food products in commerce, as commerce" is defined in the aforesaid Clayton Act, do forthwith cease and desist from:

Paying, granting, or passing on, either directly or indirectly to any buyer, or to anyone acting for or in behalf of or who is subject to the direct or indirect control of such buyer, all or any part of brokerage earned or received by respondents on sales made for their packer-principals, by allowing to buyers lower prices which reflect all or any part of such brokerage, or by granting them promotional, advertising, or other allowances rebates out of said earned brokerage, or as payment in lieu of brokerage, or by any other method or means. POINT ADAMS PACKING CO., ET AL. 859 852 Dccision DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE The Commission having considered the hearing examiner initial decision herein, filed October 15, 1958, wherein the hearing examiner accepted an agreement containing a consent order to cease and desist, theretofore executed by the respondents and counsel in support of the complaint, and entered his order in conformity therewith; and It appearing that through inadvertence the initial decision fails to recite that the complaint alleges a violation by the respondents of subsection (d) of Section 2 of the Clayton Act as amended, as weJJ as a violation of subsection (c) of said Section 2; and The Commission being of the opinion that this omission should be supplied:

It is oTileTed That the initial decision be, and it hereby is modified by striking therefrom the first sentence and substituting therefor the following:

The Federal Trade Commission (sometimes also hereinafter referred to as the Commission) issued its complaint herein charging the above-named respondents with having violated the provisions of subsections (c) and (d) of Section 2 of the Clayton Act, as amended (U. C. Title 15, Sec. 13). It is further o1'dend That the initial dccision, as so modified, shall, on the 5th day of December 1958, become the decision of the Commission.

It is fUTthC1' o1'de1' That the respondents, Point Adams Packing Co., a corporation, and Charles L. Rogers, Sr., individually and as an offcer of said corporation, and Trubenbach & SchefIold, Inc. , a corporation, and Edward H. Trubcnbach and Joseph W. SchefIold, individually and as offcers thereof, shall within sixty (GO) days after service upon them of this decision file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with the order contained in the aforesaid initial decision. 860 FEDf:RAL TRADE COMMISSION DECISIOXS Order 55 F. T.