Emard Packing Co., Inc.

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IN THE MATTER OF EMARD PACKING CO., INC., ET AL.

CONSEI\' T ORDER, ETC., IN REGARD TO THE ALLEGED VIOLA 1'101' OF SEC. 2 (c) OF THE CLAYTON ACT Ducket 721Ji . C()'lIpla, ) Sept.. 1958-Decision, Feu. J, , 1959 Consent order requiring" packers of seafood products and their exclusive primary brokers in SeaUle, Wasn. , to cease violating Sec. 2(c) of the Clayton Ad by making payments, allowances, etc., in lieu of brokerage or granting lower PI'ices which reflected brokerage to certain favored customers.

COMPLAINT The Federal Trade Commission, having reason to be1jeve that the parties respondent named in the caption hereof, and hereinafter more particularly designated and described, have been and are now violating the provisions of subsection (c) of Section 2 of the Clayton Aet, as amended (U. , Title 15, Sec. 13), hereby issues its complaint, stating its charges with respect thereto as follows:

PARAGRAPH 1. Respondent Emard Packing Co. , Inc. , hereinafter sometimes referred to as corporate packer respondent, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Washington, with its principal1 offce and place of business located at 911 Lowman Building, Seattle, Wash.

Respondent Henry J. Emard, hereinafter sometimes referred to as individual packer respondent,. is an individual and is president and treasurer of the corporate packer respondent. He owns a majority of the outstanding capital stock of the corporate packer respondent and directs and controls its business practices and policies, including its sales and distribution policies. His principal offce and place of business is the same as that of corporate packer respondent.

Thc said packer respondents, both corporate and individual have oeen for the past several years and are now engaged in the business of packing, selling- and distributing canned salmon and other seafood products, hereinafter referred to as seafood products, to various buyers throughout the United States. Itespondents' annual volume of business during the past several years has been substantial.

Complaint 55 F.

PAR. 2. Respondent Johnson Lincoln, hereinafter sometimes referred to as corporate broker respondent, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Washington with its principal offce and place of business presently located at 911 Lowman Building, Seattle, Wash.

Respondent Forrest H. Johnson hereinafter sometimes referred to as individual broker respondent, is an individual and is president of said corporate broker respondent. Said individual respondent sometimes also trades as Forrest H. Johnson Co. owns a majority of the outstanding capital stock of the said corporate broker respondent and directs its business practices and policies, including its sales and distribution policies as well as those of the Forrest H. Johnson Co.

Said broker respondents, both corporate and individual, have been for the past several years and are now engaged in the brokerage business representing a number of packer-principals one of which is now the corporate packer respondent named herein, in connection with the sale of seafood products, to various buyers located throughout the United States. Respondents ' annual volume of business during the past several years has been su bstantia1.

PAR. 3. In the course and conduct of their business both packer and broker respondents. corporate and individual, for the past several years have sold and distributed and are now selling and distributing seafood products in commerce, as "commerce" is dcfiled in the aforesaid Clayton Act, to buyers located in the several states of the United States, other than the State in which respondents are located. Said respondents transport or cause such seafood products when sold to be transported from their place of business, or from warehouses or terminals in the State of Washington 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 packer respondents, both corporate and individual, for the past several years and up until the time they entered into a joint venture with broker respondents, in the latter part of 1956, as described herein, sold their seafood products through primary brokers generally located in Seatte, Wash. , and through field brokers in the various marketing areas to buyers located EMARD PACKING CO. , INC., ET AI, 1237 1235 Complaint throughout the United States. From time to time during this period, the said packer respondents also sold direct to certain buyers without utilizing the services of either their primary or field broker. In other instances, they made sales to buyers where only one broker was utilized.

When selling through primary brokers the packer respondents paid said broker a commission or brokerage fee usually in the amount of 5 'Ie of the net selling price of the merchandise sold. When a field broker is utilized either by the packer or the primary broker, said field broker is usually compensated for his services at the rate of of the net selling price of the merchandise.

PAR. 5. In the course and conduct of their business, respondents in or about August 1956, entered into an agreement or a joint venture arrangement, whereby the broker respondents named herein would have the exclusive right to represent the packer respondents as primary brokers in negotiating sales for them at the usual primary brokerage rate. Certain direct sales in which the packer respondents did not utilize a broker were excluded from said agTcemCnl. Under this arrangement the broker respondents utilized certain of the packer respondents facilities and clerical personnel for such activities as invoicing, biling, etc. , with the net brokerage earnings being shared equally between the packer respondents and the broker respondents. Beginning on or about January) , ) 957, the agreement or joint venture was extended whereby the broker respondents would have the exclusive right to represent the packer respondents as their primary brokers in negotiating the sale of the packer respondents' entire pack at the usual primary brokerage rate, under the name and style of Emard Packing Company- Sales Division. Under' this agreement the broker respondents were also acting as primary brokers for other packers in the sale and distribution of seafood products. The sharing of facilities and brokerage earnings between the broker and the packer respondents remained the same.

PAR. 6. In the course and conduct of their business as aforesaid, respondents, both corporate and individual have in many instances made payments, grants, allm\'ances or discounts by various means and in substantial amounts in lieu of brokerage or have granted lower prices which reflect the payment of brokerage to certain favored buyers of seafood products. Decision 55 F.

Among and including, but not necessarily 1limited to, the methods or means employed by respondents in so doing. are the following:

a. Granting or allowing to certain buyers direct and indirect reductions in price in various amounts in transactions where either a primary or field broker, or both, were not utilzed. b. Granting or allowing to certain buyers direct and indirect reductions in price in various amounts in transactions where the primary or field brokers, or both, took a reduction in their brokerage on the particular transactions.

c. Selling to certain buyers at net prices \which were lower than those accounted for to the packer-principal. 111 making payments of commissions, brokerage fees PAR. 7. or granting discounts or allowances in lieu thereof, or by granting lower prices which reflect brokerage, to certain buyers as hereinabove alleged and described the respondents, and each of them, have violated and are now violating the provisions of subsection (c) of Section 2 of the Clayton Act, as amended. (L'. Titlc 15 , Sec. 13).

M,' . Cecil G. Miles for the Commission. M1' B. F. Reno. Jr. of Seatte, Wash. , for respondents. I)\ITIAL DECISION BY LOREN H. LAUCHLIN, HEARING EXAMINER This proceeding iuvolves alleged violations of S2 (c) of the Clayton Act, as amended (D. , Title 15, SI3), it being charged in the complaint, in substance, that the respondents named there- , in the course of their business of packing, selling- and distributing canned salmon and other seafood products in commerce, operating under a joint venture arrangement entered into in or about August 1956, and extender! on or about January 1 1957, whereby respondents Johnson Lincoln and Forrest H. Johnson Ivere to have the exclusive right to act RS primary brokers in negotiating the sale of the entire pack of respondents Emard Packing Co., Inc., and Henry J, Emard as packer-principals, and in certain direct sales, excluded from said arrangement, as well as in some sales for other packer-principals, have made payments, grants, allowances or discounts by various means and in SD bstantial amounts in lieu of brokerage, or have granted lower prices which reflect the payment of brokerage to certain favored buyers of seafood products.

On December 12, 1858, there was submitted to the undersigned EMARD PACKING CO., INC., ET AI" 1239 1235 De-csion hearing examiner of the Commission for his consideration and approval an "Agreement Containing Consent Order to Cease and Desist " which had been ent.ered into by and between respondents and the attorneys for both parties, under date of December , 1958, subject to the approval of the Bureau of Litigation of the Commission, which had subsequently duly approved the same. On due consideration of sllch agreement, the hearing examiner finds that said agreement, both in form and in content, is in accord with S3.25 of the Commission s Rules of Practice for Adjudicative Proceedings, and that. by said agreement the parties have specifically agreed to the following matters: 1. Respondent Emard Packing Co., Inc., is a corporation existing and doing business under and by virtue of the laws of the Stat.e of Washington, with its offce and principal place of business located at 911 Lowman Building, in t.he city of Seatte Stat.e of Washington.

Respondent. Henry J. Emard is an individual and is an offcer of respondent Emard Packing Co. , Inc., with his offce and principal place of business located at 911 Lowman Building, in the city of Seatte, State of Washington.

Respondent Johnson Lincoln is a corporation existing and doing business under and by virtue of the laws of the State of Washington, with its offce and principal place of business located at 911 Lowman Building, in the city of Seatte, State of Washington.

Respondent Forrest H. .Johnson is an individual and is an offcer of respondent Johnson Lincoln, and also trading as Forrest H. Johnson Co., with his office and principal place of business located at 911 Lowman Building, in the city of Seatte State of Washingt.on.

2. Pursuant to the provisions of S2 (c) of the Clayton Act, as mended (V. , Title 15 , SI3), the Federal Trade Commission on September 11 , 1958, issued its complaint in this proceeding against respondent.s, and a true copy was thereafter duly served on respondents.

0. Respondents admit all the jurisdictional facts allegcd in the complaint and agree that the record may be t.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.

1240 FEDERAL TRADE COMMISSIO!\ DECISIONS Decision 55 F.

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 Jaw; and (c) AI1 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 offcial record unless and until it becomes a part 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 thc law as alleged in thc complaint. 9. The following order to cease and desist may be entered in this proceeding by the Commission without further notice to respondents. When so entered it shall have the same force and effect as if entered after a full hearing. It may be 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 filed the same not to become a part of the record herein, however unless and until it becomes part of the decision of the Commission. The hearing examiner finds from the complaint and the said "Agreement Containing Consent Order to Cease and Desist" that the Commission has jurisdiction of the subject matter of this proceeding and of each of the respondents herein; that the complaint states a legal cause for complaint under the provisions of 92 (c) of the Clayton Act, as amended (l.. , Title J5, 913), against each of the respondents both generally and in each of the particulars aneged therein; that this proceeding is in the interest of the public; that the fonowing order as proposed in said agreement is appropriate for the just disposition of an of the issues in this proceeding as to al1 of the parties hereto; and that said order therefore should be, and hereby is, entered as fonows:

EMARD PACKING CO. INC., ET AL. 1241 1235 Decision ORDER It is ordco' . That Emard Packing Co. Inc. , a corporation and its offcers, and Henry J. Emard, individually and as an offcer of said corporation; and Johnson Lincoln, a corporation, and its offcers, and Forrest H. Johnson, individually and as an offcer of said corporation, and also doing business as Forrcst H. J ohnson Co. , and respondents' agents, representatives, or employees directly or through any corporate, partnership 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, ur 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. Paying, granting, or passing, 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, brokerage earned or received by respondents on sales made for their packer-principals, by allowing to buyers lower prices which reflect al1 or any part of such brokerage, or by granting them allowances or rebates which are in lieu of such brokerage, or by any other method or means.

DECISION OF THE COMMISSION A)oD ORDER TO FILE REPORT OF COMPLJAKCE Pursuant to Section 3. 21 of the Commission s Rules of Practice, the initial decision of the hearing examiner shall, on the 12th day of February 1959, become the decision of the Commissian; and, accordingly:

It is onlereel That the above-named respondents 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 mmmcr and form in which they have complied with the order to cease and desist.

Decision 55 F.