William Freihofer Baking Co.

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IN THE MATTER OF WILLIAM FREIHOFER BAKING CO., ET AL.

CONSE!\' T ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SECS. 2(a) AKD 2(d) OF THE CLAYTON ACT Docket 7072. Complaint, Feb. lD58 Decigion, Jan. 7, 1959 Censent order requiring' a large corporate baker and its subsidiary in Philadelphia to cease granting certain customers preferential discounts of up to 10'1(. from the regular wholesale prices charged their nonfavored competitors; and paying them advertising and promotional allowances of IIp to 5'/( of purchases without making 1ih payments avaiJab1c to their competitors.

COMPLAINT The Federal Trade Commission, having reason to believe that the party respondents named in ihe caption hereof, and hereinafter more particularly:y designated and described, have violated and are now violaiing the provisions of Scetion 2 (a) and 2 (d) of ihe Clayton Act as amended by the Hobinson-I'aiman Aci approved June 19, 1936 (U. S. C. , Title 15, Sec. 13), hereby issues its complaint, stating its charges with respect thereto as follows: Count I PARAGRAPH 1. I\espondeni Wilham Freihofer Baking Company is a corporation organized and doing business under and by virtue of the laws of the State of Delaware, ",iih iis principal offce and place of business located ai 20th Street and Indiana Avenue Philadelphia, Pa.

Respondent Freihofer Baking Company is a corporation organized and doing business under and by virtue of the laws the State of Pennsylvania, with its principal owce and place of business located at 20th Street and Indiana A venue, Philadelphia, Pa.

Respondent Imperial Foods, Inc. is a corporation organized and doing business under and by virtue of the laws of the State of Delaware, with its principal offce and place of business located at 20th Street and Indiana A yemJe, Philadelphia, Pa. Respondents Freihofer Baking Company and Imperial Foods Inc. are boih wholly)' owned subsidiaries of respondeni Wiliam Freihofer Baking Company.

PAR. 2. Respondents are now, and for several years have Complaint 55 F.

been engaged in the business of baking and selling bakery products, including bread, cakes and rolls. Respondents ' combined total sales on a consolidated basis covering all subsidiaries were in excess of $18,800 000 in 1956.

PAR. 3. Said products are sold by the respondents for use consumption or resale within the United States and respondents cause said products to be shipped and transported from the State of location of its principal place of business to purchasers located in States other than the State wherein the shipment or transporh,tion originated.

Respondents maintain, and at all times mentioned herein have maintained, a course of trade and commerce in said products among and between the States of the United States. Respondents maintain and operate baking plants in Philadelphia, Pa. ; Allentown, Pa. ; and Wilmington, Del. From these plants, respondents ship and sell bakery products in the States of Pennsylvania, Delaware, New Jersey, Maryland and Virginia. PAR. 4. Hespondents, in the course and conduct of their business in commerce, are now and for many years have been competitively engaged with other corporations and with individuals partnerships and firms in the sale of hakery products. PAR. 5. Respondents, in the course and conduct of their business, have been and are now discriminating in pdce bet\veen different purchasers of their hakery products of like grade and quality by selling to some purchasers ill higher and less favorable prices than they sell to other purchasers competitively engaged with the nonfavorcc1 purchasers in the resale of the products. For example, respondents have given some of their favored purchasers as high as ten percent rljscount from their regularly estahJished wholesale prices paid hy other competing purchasers not receiving the preferential discounts. PAR. 6. The effect of respondents' discriminations in price, as alleged, nlay be substantially to lessen, injure, destroy or prevent competition or tend to create a monopoly in the lines of commerce in which respondents and their purchasers are engaged. PAR. 7. The foregoing acts and practices of the respondents as alleged, viulate Section 2 (a) of the Clayton Act, as amended (U. C., Title JG, Sec. 1:)).

Count 11 PAR. 8. Each of the allegations contained in paragraphs J WILLIAM FREIHOFER BAKING CO., ET AI,. 995 993 Decjsion through 4 of this complaint are now rea1leged and incorporated in this count as if they were set forth in full. PAR. 9. Respondents in the course and conduct of their business, have been and are now paying advertising and promotional allowances to certain favored purchasers without making the allowances available on proportionally equal terms to a1l other purchasers competing in the distribution of their products. For example, respondents have given special advertising and promotional allowances to certain of their purchasers which in some instances amounted to five percent of the purchase price. Such allowances were not made available on proportionally equal terms by respondents to other purchasers competing in the resale of respondents' products with those receiving the allowances. PAR. 10. The acts and practices of respondents, as alleged violate Section 2 (d) of the Clayton Act, as amended, (V. Title 15 , Sec. 13) .

Mr. Fmncis C. Mayer and M?' Fmnklin A. Snyder for the Commission.

Nit. Fait/ax Leary, h. and 1'T. Robert W. SaYTe of Saul Ewing, Remick Saul of Philadelphia, Pa. , for respondents. INITIAL DECISION BY JOHN B. POINDEXTER, HEARING EXAMINER On February 27 1958, the Federal Trade Commission issued its complaint in this proceeding a1leRing that William Frcihofer Baking Co., a corporation, erroneously referred to in the caption of the complaint as William Freihofer Baking Company, a corporation, Freihofer Baking Company, a corporation, and Imperial Foods, Inc., a corporation, hereinafter called respondents violated thc provisions of Section 2 (a) and 2 (d) of thc Clayton Act, as amended by the Robinson-Patman Act, approved ,J unc 19, 1936 (U. S. C. , Title 15 , Sec. 13), by discriminating in price between different purchasers of their bakery products of like gracte and quality and granting promotional allowances to certain favored purchasers \vithout making the allowances available on proportionally equal terms to all other purchasers competing in the distribution of their products.

On November 6, 1958, there was submitted 1.0 the undersigned hearing examiner an agreement executed by respondents \Villiam Freihofer Baking- Co. and Imperial Foods, Inc. , their counsel and counsel supporting the complaint, providing for the entry of a consent order.

Decision 55 F. T.

The order disposes of the matters complained about. The ag-reement has been approved by the diredor and assistant director of the Bureau of Litig-ation.

The agreement recites that the respondent Freihofer Baking Company '\' as a corporation organized under the laws of the State of Pennsylvania, and that, on May 18, 1958, said corporation las merged into and now continues in William Freihofer Raking Co. ; that the president of William Freihofer Baking Co., in signing the agreement, is acting for the present corporation and the Freihofer Baking- Company which has been merged therein; a certificate of merger having been duly issued by the Pcnnsyl vania Department of State and by the express provisions of Section 907 of Article 9 of the Pennsylvania Business Corporation Law (Public Law 864, May 5, 1933), the separate existence of the Freihofcr Baking' Company having ceased. The term "respondents " as used in said agreement, includes the respondent Freihofer Baking Company as an integral part of the William Freihofer Baking Co.

The pertinent provisions of said agreement are as follmvs: The respondents admit all jurisdictional fads; the complaint may be used in construing the terms of the order; the order shall have the same force and effect as if entered after a full hearing and the said agreement shall not become a part of the offcial record of the proceeding unless and until it becomes a part of the decision of the Commission; the record herein shall consist solely of the complaint and the agreement; respondents waive the requirement that the decision must contain a statement of fmc1ings of fact and conclusions of law; respondents waive further procedural steps before the hearing examiner and the Commission and the order may be altered, modified, or set aside in the manner provided by statute for other orders; respondents waive any right to challenge or contest the validity of the order entered in accordance with t.he agreement, and the signing of said agreement is for settlement purposes only and does not constitute an admission by re,pondents that they have v;oJatec1 the law as alleg-ed in the complaint.

The hcarirlg examiner havi11g considered the agreement and proposed order, and being of the opinion that the acceptance thereof will be in the public interest, hereby accepts such agreement, makes the fol1moving jurisdictional findings, and issues the following order;

WILLIAM FREIHOFER BAKING CO., ET AL. 997 993 Order JURISDICTIONAL FINDINGS 1. Respondent Wilham Freihofer Baking Co. is a corporation organized and doing business under the laws of the State of Delaware, with its offce and principal place of business located at 20th Street and Indiana A venue, Philadelphia, Pa. 2. Respondent Imperial Foods, Inc. is a corporation organized and doing business under the laws of the State of Delaware, with its offce and principal place of business also located at 20th Street and Indiana A venue, Philadelphia, Pa. 3. Respondent Freihofer Baking Company was a corporation organized and doing business under the laws of the State of Pennsylvania, and, on May 18 , 1958, ,vas 111erged into and now continues in respondent Wiliam Freihofer Baking Co. The seprate existence of Freihofer Baking Company has ceased. 4. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents and the proceeding is in the public interest.

ORDER It is onlej' That respondents William Freihofer Baking Co. a corporation, and Imperial Foods, Inc. , a corporation, and their offcers, representatives, agents, and employees, directly or through any corporate or other device, in or in connection with the sale of bread and bread products in commerce, as "commerce " is defined in the amended Clayton Act, do forthwith cease and desist from: 1. Discriminating, directly or indirectly, in ihe price of such products of like grade and quality by selling to anyone purchaser at net prices higher than the net prices charged to any other purchaser who, in fact, competes with the purchaser paying the higher price in the resale and distribution of the respondents' products; and 2. Making or contracting to make, to or for the beneflt of any customer, any payment or allowance of anything of value as compensation or in consideration for any advertising or other services or facilities furnished by or through such cllstonWl' , in connection with the handling, offering for resale, or resale of products sold to him by respondents, unless such payment or allmvance is affrmatively offered or other,vise made available on proportionally equal terms to all other customers competing with the favored purchaser in the distribution or resale of such products. Decision 55 F.

DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shah, on the 7th day of January 1959 , b come the decision of the Commission; and accordingly:

It is ordered That respondents Willam Freihofer Baking CO. l a corporation, and Imperial Foods, Inc., a corporation, their offcers, representatives, agents, and employees, shall within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist.

1 Erroneously referred to in the caption of the complaint and other do"u/IJenls lis WiJliaJT\ Freihofer Bilking ComlJany.

Tile DENVER DRY GOODS CO. 999 Decision