Airtex Products, Inc.

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF AIRTEX PRODUCTS, INC.

CONSENT ORDER, ETC., IN REGARD TO TI-IE ALLEGED VrOLATIO!\' OF SEC. 2(a) OF THE CLAYTON ACT Docket alfiG. COlljJlai-nl. , JUIl(' 1957 - Decisio' j"fny, 1959 Consent order requiring' a Fairfield, II!. , manufacturer of automotive replacement parts, including' fuel and water pumps, to cease violating Sec. 2(a) of the Clayton Act by such practices ::S allowing group wholesalers offscale discounts or rebates totaling 18( of current list prices on all of their purchases while giving independent wholesale customers a maximum discount of H% on the first $1 500 of purchases in each year; and Placing -in cumem pertinent cost study rnaterial attached to the agTcemcnt. COMPLAINT The Federal Trade Commission, having reason to believe that the party respondent named in the caption hereof, and hereinafter more particularly designated and described, has violated and is now violating- the provisions of subsection (a) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act approved June 19, 1936 (t:. , Title 15, Sec. 13), hereby issues its complaint, stating its charges with respect thereto as follows: PARAGRAPH 1. Airtex Produds, Inc. , respondent herein, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Ilinois, with its principal offce and place of business located at 407 West Main Street. Fairfield, Ill.

PAR. 2. Respondent is engaged in the business of manufacturing and selling automotive replacement parts, including fuel and "vater pumps, and rebuilding and seiling used automotive fuel pumps. Respondent' s total sales in 1955 exceeded S7 500,OOO. Respondent manufactures and rebuilds said automotive replacement parts in its factory in Fairfield, Il" and sells and ships such parts to more than one thousand automotive replacement parts wholesalers located throughout the United States and in the District of Columbia. Respondent in the sale of said parts has at all times relevant herein been and now is engaged in commerce, as "commerce" is defined in the amended Clayton Act. PAR. 3. Among respondent' s more than one thousand wholesaler customers are many who have banded together into or- AIRTEX PRODUCTS, INC. 1755 1754 Complaint ganizations commonly referred to as jobber groups, buying groups or simply, groups. Such customers are hereinafter referred to as group wholesalers and those not affliated with a group are referred to as independent wholesalers. Such group wholesalers and independent wholesalers are frequently located in the same trade area and compete each with the other in the resale of said automotive replacement parts. PAR. 4. In the course and conduct of its business in commerce the proposed respondent has been and is now, in each of several trading areas, discriminating in price in the sale of its products of like grade and quality by selling them to some independent wholesalers at higher prices than it sells them to other independent wholesalers and group wholesalers who are competitively engaged each with the other in the resale of said products. Uespondent has effected said discriminations between independent wholesalers by allowing such purchasers non-retroactive discounts or rebates from its jobber list prices based upon total annual purchases, as shown by the following schedule: Percent $0 to $1 500 u 500 and up- Through the operation of the described sales program those independent wholesalers whose total annual purchases from respondent are below $1 500 are charged higher and less favorable net prices than are other competing independent wholesalers whose purchases from respondent exceed $1 500. Uespondent has effected said discriminations between group wholesalers and all independent wholesalers by allowing group wholesalers off-scale discounts or rebates totaling 18/6 of current Jist prices on all of their purchases. The granting of the described 18% off-scale rebate or discount to group wholesalers on their full purchase volume discriminates against all of respondent' independent wholesaler customers who, in accordance with the above schedule, receive a maximum discount of 8 % on the first 500 of purchases in each year.

PAR. 5. The effect of respondent's discriminations in price, as above alleged, may be substantially to lessen, injure, destroy or prevent competition between and among respondent's independent and group distributors in the resale of products purchased from respondent, PAR. 6. The acts and practices of respondent as above alleged 1756 FEDERAL TRADE COMMfSSION DECISIONS Decision ' F. constitute violations of the provisions of subsection (a) of Section 2 of the Clayton Act (U. , Title 15, Sec. 13), as amended by the Robinson-Patman Act, approved .r une 19 , 1936, M,' . William W. Rogal for the Commission. Arvey, Hoc/es anc/ Mant?Jl'band of Chicago, Ill., by 1\1" He?l' J. Shames for respondent.

INITIAL DECISION BY WrLLIAM L, PACK , HEARING EXAMINER The complaint in this matter charges the respondent with price discriminations in the sale of automotive replacement parts, in violation of Section 2 (a) of the Clayton Act, as amended. An agreement has now been entered into by respondent and counsel supporting the complaint which provides, among other things, that respondent admits all of the jurisdictional allegations in the complaint; that the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and agreement; that the inclusion of findings of fact and conclusions of law in the decision disposing of this malter is waived, together with any further procedural steps before the hearing examiner and the Commission; that the order hereinafter set forth may be entered in disposition of the proceeding, such order to have the same force and effect as if entered after a fuII hearing, respondent specifically waiving any and aii rights to challenge or contest thc validity of such order; that thc order may be altered, modified, or set aside in the manner provided for other orders of the Commission; that the complaint may be used in construing the terms of the order; and that the agreement is for settement purposes only and does not constitute an admission hy respondent that it has violated the law as alleged in the complaint.

The complaint charges two general classes of price discriminalions; (1) discriminations between group wholesalers and independent wholesalers, and (2) discriminations among independent wholesalers. Regarding the latter charge, the agreement contains the following;

Counsel in support of the complaint. has concluded that the price differential between independent wholesalers which is allegcd to be unlawful in the first three subparagraphs of paragraph 4 of the complaint makes only due allowance for differences in the cost of selling and delivering tn such customers. This conclusion by counsel in support of the comptaint is based upon cost studies conducted by respondent and submitted for consideration after the issuance of the complaint. Therefore, this agreement is not based in any AIRTEX PRODUCTS, INC. 1757 1754 cision manner on this allegation of the complaint and it should not be used in interpreting' the; provisions of the onlet" to cease and rlesist contained in this 3agreement. This above statement, however, should not be interpreted as excluding from the order price discriminations between independent wholsaler customers.

The cost study material pertinent to this matter is attached to this agreement as appendices A through ,J. It is requested that this material be placed in camel"

The hearing examiner having considered the agreement, including the cost study material attached thereto, and the proposed order and being of the opini011 that they provide an adequate basis for appropriate disposition of the proceeding, the agreement is hereby accepted, the following jurisdictional findings made, and the following order issued; 1. Respondent Airtex Products, Inc., is a corporation existing nnd doing business under the laws of the State of Ilinois, with its offce and principal place of business located at 407 West Main Street, Fairfield, 111.

2. The Federal Trade Commissi.on has jurisdiction of the subject matter of this proceeding and of the respondent. ORmm It is o?'de1'ed That respondent Airtex Products, Inc. , a corporation, and its offcers, representatives, agents and employees directly or through any corporate or other device, in or in connection with the sale, for replacement purposes, of automotive replacement parts in commerce, as "commerce " is defined in the Clayton Act, do forthwith cease and desist from: Discriminating, directly or indirectly, in the price of such automotive replacement parts 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 respondent' s products.

DECISION OF Tile COM IISSION AND ORDER PLACING MATERIAL IN CAMERA AND TO FILE REPORT OF COMPLIANCE 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 May 1959, become the decision of the Commission; and accordingly:

It is ordered That the cost study material pertinent to this Decision 55 F.

matter attached to the agreement and identified as appendices A through J be, and it hereby is, placed in camera. It is further OI'de,' That the above-named respondent shall within sixty (GO) 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.

THE FIRESTONE TIRF: & RUBBER CO. 1759 Decision