The Gummed Industries Association, Inc., et al.

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IN THE MATTER OF TH)'; GUMMED INDUSTRIES ASSOCIATION , INC., ET AL. ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLA Tlon THE FEDERAL TRADE COM)llSSION ACT Docket 707.9. Complaint, ?day. lD58-Decision, Maj'. , 1959 Order dismissing without prejudice as to respondent Minnesota Mining and Manufacturing Company, the complaint charging- suppression of competition in the manufacture and distribution of flat gummed papeTo On Oct. 3, 1958, the Commission adopted a consent order disposing of the matter as to an other respondents, page 500 herein. 11,. . And,-e1l. C. Goodhope and 1Ir. John Perechinsky for the Commission.

, by 11r. Connolly, Tucker, Post rnul Lyons of St. Paul, 1\linn. John L. Connolly, for Minnesota Mining and Manufacturing Company.

INITIAL DECISJON DISMISSING COMPLAINT WITHOUT PREJUDICE AS TO RESPONDENT MINNESOTA MINING AND l'I'MANUFACTURING COMPANY BY EARL J. KOLB, HEARING EXAMINER This proceeding is now before the undersigned hearing examiner for final consideration upon the complaint, ansv./er of respondent Minnesota Mining and Manufacturing Company there- , stipulation as to the facts entered into upon the record between counsel supporting tbe complaint and said respondent Minnesota Mining and lVlanufacturing Company, and motion io dismiss and briefs in support thereof filed by said respondent Minnesota Mining and Manufacturing Company, answer to said motion filed by attorneys in support of the complaint, and reply brief filed by said respondent.

The hearing examiner has given consideration to said stipulation, motion to dismiss and briefs filed in support of and in operation ihereto, and the record herein, and being now 1'ul1y advised in the premises makes the following findings as to the facts, conclusions drawn therefrom, and order: FINDINGS AS TO THE FACTS 1. Respondent l\1innesota :vining and IVlanufacturing Company is a corporation organized and existing under and by virtue , , Findings 55 F.

of the Jaws of the State of Delaware with its offce and principal place of business located at 900 Bush A venue, St. Paul, Minn. 2. Mid-States Gummed Paper Company, hereinafter referred to as "Mid-States " "vas a Delaware corporation with offces and factory in Chicago and Bedford Park, Ill. On September 20, 1944, respondent Minnesota Mining and Manufacturing Company acquired all the capital stock of said Mid-States, and from September 20, 1944 , to November 30 , 1957, said Mid-States was operated as a wholly owned subsidiary of respondent Minnesota Mining and Manufacturing Company. On November 30, 1957, said IVlic1-States was dissolved as a corporation, and the business previously operated by said Mid-States bas since December 2, 1957, been operated by respondent Minnesota Mining and lanufacturing Company as the l\'1icl-States Gummed Paper Division of 1\.1innesota Mining and lVlanufacturing Company. 3. The complaint in this proceeding charKes that the respondents named in the caption hereof, acting by and through and with the assistance of the respondent the Gummed Industries Associ::ltion, Inc. , have entered into and maintained a combination, conspiracy and planned common course of action to hinder Jessen, restrict, or suppress competition among and between themselves and others in the manufacture and distribution of flat gummed paper.

4. Subsequent to the issuance of the complaint in this proceeding, all of the respondents named in the caption hereof, except l\finnesota :Mining and l\1manufacturing- Company, a corporation, entered into an agreement containing a consent order to cease and desist which agreement \Nas accepted by the hearingexaminer and initial decision ,vas issued by him as to the respondents other than Minnesota IUining and Manufacturing Company, which initial cleeision was adopted by the Commission by its order issued October 3 , J 958.

o. The participation of the Mid-States Gummed Peper Company in the acts and practices charged in the complaint is admitted by the respondent Minnesota Tinjng and Manufacturing Company in its stipu1atjoll entered into on the record in this proceeding. The motion to dismiss raises two issues: (l) Whether the extent of control which the respondent Minnesota Mining and Manufacturing Company maintained over l\lid- States was sufficient to hold it responsible for the acts and practices of Mid-States as charged in the complaint; and THE GUMMED INDUSTRIES ASS!'. , INC., ET AL. 1411 1409 Conclusions (2) Whether or not there has been such a discontinuance of a dismissal in the pcblicthe practices alleged to warrant interest.

6. At the time of the acquisition of the capital stock of Mid- States Gummed Paper Company by the Minnesota Mining and Manufacturing Company, it \vas arranged that the operation of thc Mid-States Gummed Paper Company continue as an independent company under the direction and supervision of the offcers and personnel originally \with the company. Certain directors of Minnesota l\lining and Manufacturing Company '.were also directors of I\1ic1-States at various tin1€S, but none cf the offcers or employees of Minnesota became oflcers of Mid-States, except that in the latter part of 195(; Waldo G. Bretson, Minnesota s plant manager at Bedford Park, Ill, also acted as manufacturing ilan- , 1957ag.er of Mid-States, and later, during the period May 29 up to November 30 , 1957, was vice president and general manager of Mid-States.

7. It further appears from the stipulation and the exhibits made a part thereof that :Minnesota 1\lining and Manufacturing Company at the time it dissolved Mid-States and made it a division of Minnesota did not adopt or maintain the prices and pricing practices of Mid-States, and that the :Vlid-States' prices and pricing systems were discontinued on l\ovember 30 , 1957, sevin thi.eral months prior to the issuance of the compl lint proceeding.

CONCU;SIONS 1. Respondent l\1innesota Mining and Nfanufacturing Company did not directly)' participate in, or commit, the unlawful acts charged in tbe complaint. All of the evidence in the record regarding the alleged unlawful acts pertains to Minnesota s for.. mer wholly owned subsidiary, Jid- States. "\Vhen Minnesota dis- , and made it a division solved Mid-States on November 30 1957 of '1nnesota, it did not ratif)' the alleged unlawful acts and practices of Mid-States, but instead immediately discontinued the prices and pricing system previously followed by Mid-States. 2. The evidence in the record is not suffcient to support a finding that NIinnesota i'lining and 1'Ianufacturing Company, by , has reason of its relationship with its subsidiary, :\1id-States violated the Federal Trade Commission Act as charged in the complaint. The record in this proceeding does not establish, by substantial evidence, that Minnesota maintained such complete 1412 FEDERAL TRADE COM"IISSION DECISIONS Decision 55 F.

control of its subsidiary, Mid-States, as to ,ender Mid-States a mere tool of Minnesota and to compel the conclusion that the fiction. Nationa1corporate entity of the subsidiary is a mere Lead Company v. PedemJ Trade Commission (C. A. 7, 1955) 227 F. 2d 825, 829.

ORDER It is the,.efon m.dered That tbe complaint be dismissed without prejudice as to respondent l\linnesota l\1:ining and lVlanufacturing Company.

DECISION OF THE COMMISSION Pursuant to Section 3.21 of the Commission s Rules of Practice , on the 7tbthe initial decision of the hearing examiner shan (hey of March 1959, become the decision of the Commission. JOB LOT TRADING CO. 1413 Decision