M. Benkel & Sons, Inc.

Volume 56 · 56 F.T.C. 814

Cited as a basis for the FTC Notice of Penalty Offenses on Fur (1978).

Citation: 56 F.T.C. 814
Docket: 7594
Complaint: 1959-09-23
Decision: 1960-01-30
Document type: consent order
Case type: consumer protection
Statutes: FTC Act (section 5); Wool Products Labeling Act
Industry: wool products manufacturing
Outcome: consent order entered
Relief: cease_and_desist
Order term (years): 10
Respondent counsel: ifr, Louis J. Zieden, of New York, N.Y; Wright, of Detroit, Mich
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M. Benkel & Sons, Inc., 56 F.T.C. 814 (1960). Consumer Law Library, https://consumerlawlibrary.org/decisions/v056-0174

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Order status: presumptively_terminable_pre_1995. Sunset may be extended by the latest qualifying federal-court complaint alleging an order violation; complaints, dismissal/appeal outcomes, and respondent-specific extensions are not fully tracked.

Cited by 1 later FTC decisions

Notice of Penalty Offense references are listed separately above in the existing Phase 1 links.

DIAMOND CRYSTAL SALT CO cited_neutral

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In toe MAarrer oF M. BENKEL & SONS, INC., ET AL.

CONSENT ORDER. ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FENERAL TRADE COMMISSION AND THE WOOL PRODUCTS LABELING ACTS Docket 7593. Complaint, Sept. 23, 1959—Decision, Jan. 30, 1960 Consent order requiring manufacturers in New York City to cease violating the Wool Products Labeling Act by labeling as “100C—, wool,” caps which M. BENKEL & SONS, INC., ET AL. 815 S14 Decision contained substantially less than 100% wool, and by failing to label other wool products as required.

Mr. Charles Donelan supporting the complaint. ifr, Louis J. Zieden, of New York, N.Y., for respondents. Initia Decision sy Leon R. Gross, Hrarine Examiner On September 23, 1959, pursuant to the provisions of the Federal Trade Commission Act and the Wool Prducts Labeling Act, the Federa] Trade Commission issued its complaint in these proceedings against respondents. Although Morris Benkel’s first name was spelled “Maurice” in the complaint, an affidavit, sworn to on November 80, 1959 is to the effect that, and the hearing examiner finds that Morris Benkel and Maurice Benkel are one and the same person, who is the respondent named in the original complaint, and an officer and director of M. Benkel & Sons, Inc. A true copy of the complaint was served upon respondents. The complaint charges respondents with violating the Wool Products Labeling Act by misbranding articles in commerce, (as “commerce” is defined in the Federal Trade Commission Act and the Wool Products Labeling Act) within the intent. and meaning of Section 4(a)(1) and 4(a) (2) of the Wool Products Labeling Act.

After being served with the complaint respondents appeared by counsel. Thereafter respondents entered into an agreement dated November 80, 1959 which purports to dispose of all of this proceeding as to all parties without the necessity of conducting a hearing. The agreement has been signed by the respondents, their counsel, and by counse] supporting the complaint; and has been approved by the Director and Assistant Director, Bureau of Litigation, of the Federal Trade Commission. Said agreement. contains the form of a consent cease and desist order which the parties have agreed may be entered by the hearing examiner and which has been represented to be dispositive of the issues involved in this proceeding. On December. 14, 1959 the said agreement was submitted to the undersigned Hearing Examiner for his consideration in accordance with Section 8.25 of the Commission’s Rules of Practice for Adjudicative Proceedings.

Respondents, pursuant to said agreement. have admitted all the jurisdictional facts alleged in the complaint. and agreed that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations. Said agreement further provides that respondents waive any further procedural steps before the hearing examiner and the Federal Trade Commission ; Decision 56 I .T.C.

the makings of findings of fact or conclusions of law; and all the rights they may have to challenge or contest the validity of the order to cease and desist entered in accordance with the agreement. The parties to the agreement have, inter alia, by such agreement agreed :

(1) The order to cease and desist issued in accordance with said agreement will be entered in this proceeding by the Commission without further notice to the respondents, and, when so entered, such cease and desist order shall have the same force and effect as if entered after a full hearing; (2) the complaint may be used in construing the terms of said order; (8) the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and the agreement; and (4) the agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint.

This proceeding having now come on for final consideration on the complaint and the aforesaid agreement of November 80, 1959, containing consent order, and it appearing that the order provided for in said agreement covers all of the allegations of the complaint and provides for an appropriate disposition of this proceeding as to all parties; the agreement of November 30, 1959 is hereby accepted and ordered filed at the same time that this decision becomes the decision of the Federal Trade Commission pursuant to Sections 3.21 and 3.25 of the Commission’s Rules of Practice for Adjudicative Proceedings; and The undersigned hearing examiner having considered the agreement and proposed order and being of the opinion that the acceptance thereof will be in the public interest, makes the following jurisdictional findings, and issues the following order: JGRISDICTIONAL FINDINGS 1. That the Federal Trade Commission has jurisdiction over the parties and the subject matter of this proceeding; 2. Respondent M. Benkel & Sons, Inc. is a corporation, existing and doing business under and hy virtue of the laws of the State of New York, with its office and principal place of business located at 640 Broadway, in the City of New York, State of New York. Individual respondents Morris Benkel (herein previously complained against as Maurice Benkel), Samuel Benkel and Bernard Benkel are officers of the said corporate respondent and control, direct and formulate the acts practices and policies of the said corporate respondent. The office and principal place of business of M. BENKEL & SONS, INC., ET AL. 817 814 Order the said individual respondents is the same as that of the corporate respondent.

3. Respondents are engaged in commerce as “commerce” is defined in the Federal Trade Commission Act;

4. The complaint herein states a cause of action against said respondents under the Federal Trade Commission Act, and the Wool Products Labeling Act, and this proceeding is in the public interest. ORDER It is ordered, That the respondents, M. Benkel & Sons, Inc., a corporation, and its officers and Morris Benkel (herein previously complained against as Maurice Benkel). Samuel Benkel, and Bernard Benkel, individually and as officers of said corporation, and respondents’ representatives, agents and employees, directly or through any corporate or other device, in connection with the introduction or manufacture for introduction into commerce, or the offering for sale, sale, transportation, or distribution in commerce, as “commerce” is defined in the Federal Trade Commission Act and the Wool Products Labeling Act of 1939, of men’s caps or other wool products, as such products are defined in and subject to the Wool Products Labeling Act of 1939, do forthwith cease and desist from misbranding said products by:

1. Falsely or deceptively stamping, tagging, labeling or otherwise identifying such products as to character or amount of the constituent fibers included therein.

9. Failing to securely affix or place on each such product a stamp, tag, label, or other means of identification showing in a clear and conspicuous manner:

(a) The percentage of the total fiber weight of such wool products. exclusive of ornamentation not exceeding five percentum of said total fiber weight, of (1) wool, (2) reprocessed wool, (8) reused wool. (4) each fiber other than wool where said percentage by weight of such fiber is five percentum or more, and (5) the aggregate of all other fibers;

(b) The maximum percentage of the total weight of such wool prodnets of any non-fibrous loading, filling. or adulterating matter; (c) The name or the registered identification number of the manufacturer of such woe] product or of one or more persons engaged in introducing such wool products info commerce, or in the offering for sale, sale, transporiation. distribution, or delivery for shipment thereof in commerce, as “commerce” is defined in the Wool Products Labeling Act of 1939.

:);

818 FEDERAL TRADE CO:\L\IISEJO),' DU:ISIO),'S Complaint 56 F.

DECJSIOX OF THE CO::DIISSIOX A1\1) OImEn TO Fli.E HEPORT OF CQ1\rrLTANCE Pursuant to See-tion 3.21 of the Commi :-i()n s Rules of Practice the initial decision of the hearing examiner shan, on the 30th day of .January, 1860, becOTne the decision of the Commission; and accordingly:

it is ordered That the re ponc1el1ts herein shall, within sixty (60) days aiJel' seITler upon theil of this order, file 'with the Commission a report in '\Tiling t-setting forth in rletnil the rnanlle.r and form in \which tlJ( ' ha\'(' compl.iec1 with the order to cease and desist.

Ix THE T\fATTEH OF DIA:\fOKD CRYSL\L SALT CO.

CO:\EE:! T mUlER. FTC.. IX Rn;",\TID TO THE ALLEGED VJOL,\TION OF SEC. 7 OF THE CL\ rlo:: ACT JJoeket ,323. CO'lp/aillt. Dee. , 19;iR- Dccislo' /i. Fev. 1, J%' C(ln eJjj urder n:'ljljiring oue of tile !lnti(lil Jurgps1 salt J)l"oduccrs - To rliYf'1'1 itself 8hso1ute)y, v,ithilJ six ilon1l1s, of :111 illtcn,qs in tile " sell((";) Lnkr" property it ijUl\1irf'd ill the nC(J1Ii::iliOll oJ :Jr1'It.l"son Island Snit C(1JlJl,ln, L(11i;;,iiJe, E , in :Jmlllfry J Y(i, 1(1g"Ctl(j" "itll mioing ri llts Oil IlIJ ad iar.:cl\t: J1r()prrl~.

Tn rcfrain fro)ll selling Sl1d1 lJ!"01'crties 1(1 n.Ii - one ulHler its control or 10 ::11Y other salt pru(I1\."('1 JWyin '- aLlIJwl p!"olhl(UurJ oJ (1r sult in e:'n ss (1: )O. ()O(1 !I())"1 tons oyer 11 fih' YC;lr Ilcri(1!' To (h'fOiq fo)' tfOll years from :Jc(luil'in;c the as ets or stock of ady other alt II1"J(lllct'r 01" clistrilm1or:

Aftp)" such ten-Y!';l1' pCl'j('rl, 1(1 ;:i\"c pri(1r II(11irf' tn t11( ComI!iO'sioIl of int(' IItion t(l acquire flny Sl1cjl pl'OChlCI.!' OJ" (li"tri!motor or tu Dwrgc "ith ml- (1t1le1' corporation: and For ren YI':ns lei wnJ;e fall p,' (I(lllcpcl at it If'ffer,,CIT l"l:lI d plant wrnilnhk (n (1\11(' 1' l1l"mh1(' el''- . Il ill tJi( oiler' l)(l(lw "p"r'ifi"d (lJfPI._\IXT TJ1P Fpclpr:d 'Irnclr CnEJmissic)J. h:\yjJl 1T130n 10 belieyp that the pari - I' I)o)1(!rlJt 1J:\)11((1 II t11( r;\phol1 hprl'of and herrin,lfter more c1l' :g-Jl(lt ed ami de criJwd. h;\s yiolat(.cl ancl is ncnyTJfll'ticn b rl yjohtil1 - t;,r Tn'(lyj~ions of Srct!on 7 (If 11w CI1:\'10n Act n7. Lt1f-' 15. Sec . 1 ) :tS :111WIHLCcl fHj(l apprrn-ed J)l-cpmber 2\) , IDEJO herrhy ::I1CS ' ' cCJlJr1nint cll,1l ing 8 !'oJ1 o\y'- : \EAGIL\I'I! "l. ((1) J\r p()ll(leJlL J)i:trnond Cr:'stnl Sn1t Co.. herejnafter onle tinw rde1TCC! tn ;F ni:\l:oI1d CJ':' la1. js a corpot8.tion :);

818 FEDERAL TRADE CO:\L\IISEJO),' DU:ISIO),'S Complaint 56 F.

Ix THE T\fATTEH OF DIA:\fOKD CRYSL\L SALT CO.

(b) The business of Diamond Crystal was originally founded in 1886 as the Diamond Crystal Salt Company, Inc., at St. Clair, Michigan. In 1929, the outstanding capital stock of Diamond Crystal Salt Company, Inc., was acquired by General Foods Corporation which dissolved the original corporation in 1946. Following the dissolution, the business, along with the operations of the Colonial Salt Company, Akron, Ohio, which was acquired in 1945, were continued as the Diamond Crystal-Colonial Salt Division of the General Foods Corporation. On March 80, 1958, Diamond Crystal purchased the assets and business of the Diamond Crystal-Colonial Salt Division from General Foods Corporation.

(c) Respondent is engaged in the business of producing and distributing sodium chloride, hereinafter sometimes referred to as salt. The salt produced by respondent. is offered for sale, sold, and distributed to purchasers thereof located in various States of the United States and in the District of Columbia. In the course and conduct of its business, respondent has engaged in commerce, as “commerce” is defined in the Clayton Act. as amended. (d) Diamond Crystal owns two salt producing plants, one located at St. Clair, Michigan that operates eleven salt wells, and another at Akron, Ohio that operates six salt wells. Diamond Crystal’s salt reserves at St. Clair. Michigan and Akron. Ohio are substantial, and it also owns two proven but capped salt wells at Hammondsport, New York. Prior to January, 1957. Diamond Crystal was an evaporated salt. producer, producing sodium chloride by the solution mining method of injecting water into underground deposits, creating salt wells. and pumping out artificial brine which is evaporated to produce salt. Evaporated salt. of many types and grades is produced by Diamond Crystal for table use as well as for commercial and industrial purpeses.

(e) Prior to January 1957, Diamond Crvstal sold and distributed salt under the brand names, “Diamond Crystal." “Cclonial,” “Weather-Pruf.’ and “Shaker.” among others. Sates of salt were made jn various States of the United States and also exported, but the principal marketing territory of Diamond Crvstal was East of the Mississippi River. Diamond Crvstal sold salt, among others, to the following ciassrs of customers: fond processors, meat packers, erocery distributors. feed dealers and mixers. industrial consumers, chemical manufacturers, various governmental agencies, and other salt. producers.

Complaint 56 F.T.C.

(f) Diamond Crystal is a growing and profitable concern which, at the end of 1956, was one of the five largest dry salt producers in the United States. During the first three years of its operations, from on or about April 1, 1953, to March 31, 1956, Diamond Crystal’s net. sales increased from $10,196,013 to $11,585,417, an increase of about 14 percent, and its net income increased from $363,920 to $909,478, an increase of about 150 percent. During this same period, its total assets increased from $7,875,416 to $8,966,902, an increase of about. 22 percent.

Pan. 2. (a) Prior to January 1957, Jefferson Island Salt Company, hereinafter sometimes referred to as Jefferson Island, was a corporation organized on July 29, 1919, and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located at 136 St. Matthews Avenue, Louisville 7, Kentucky. The name of the corporation was changed in February, 1947, from Jefferson Island Salt Mining Company to Jefferson Island Salt Company.

(b) Jefferson Island was engaged in the business of producing and distributing sodium chloride. The salt produced by Jefferson Island was offered for sale. sold and distributed to purchasers thereof located in various States of the United States and in the District of Columbia. In the course and conduct. of its business, Jefferson Island was engaged in commerce, as “commerce” is defined in the Clayton Act, as amended.

(c) Jefferson Island owned and operated a salt producing mine and processing plant, with railroad. truck and barge loading facilities located at New Iberia (Jefferson Island, P.O.), Louisiana. At this site, it controlled substantial salt reserves, owning or possessing mineral rights to salt deposits of an estimated depth of 25,000 feet, and of a purity ranging from 99.30 to 99.86 percent sodium chloride. Jeflerson Island mined and extracted sodium chloride from this deposit by means of the room and pillar mining method. From a shaft that has been eumk into this deposit. Jarge rooms have been cut. out of pure salt. Salt is blasted loose. loaded into cars and hoisted to the surface for processing and refining. Jefferson Island was principally a rock salt producer, producing all types and graces of rock galt for table use as well as for commercial and industrial purposes.

(d) The Jefferson Island plant also had boilers, evaporators and other facilities and equipment for producing evaporated salt, and Jefferson Island produced a substantial quantity of evaporated salt for table use as well ag for commercial and industrial purposes. (ce) Jefferson Island sold and distributed salt. under the brand DIAMOND CRYSTAL SALT CO. 821 818 Complaint names, “Jefferson Island,” “Everready,” “Old Rip,” “Sof-T-Salt,” “Champions Choice,” “Big Steer,” “Salt All” and “Self-Fed,” among others. Sales of salt were made in various States of the United States East of the Rocky Mountains and for export, however, the principal marketing territory of Jefferson Island was East of the Mississippi River. Jefferson Island sold salt, among others, to the following classes of customers: food processors, meat packers, grocery distributors, feed dealers and mixers, industrial consumers, chemical manufacturers, various governmental agencies, and other salt. producers.

(f) Prior to January, 1957, Jefferson Island was the largest independent dry salt producer in the South and was one of the six largest. dry salt producers in the United States. Jefferson Island’s net sales increased from approximately $3,425,000 for the year ended December 31, 1950, to $8,802.638 for the eleven months ended November 80, 1956, an increase of about 11 percent. Its net income increased from about $309,000 for the year ended December 81, 1950 to &508,670 for the eleven months ended November 380, 1956, an increase of about 64 percent. During this same period its total asset increased from approximately $2,890,000 in 1950 to $4,022,120 as of November 80, 1956, an increase of about 39 percent. Par. 8. (a) Sodium chloride, or salt, is one of the oldest, most commonly used and widely distributed mineral materials. In its natural state, it is generally found in two forms. as solid rock salt and as natural brine, and it is produced commercially from either form. Sodium chloride is the same chemically, wherever found, containing 89.54 percent sodium and 60.66 percent. chloride. It is produced and sold commercially in a dry state for table use and for various other commercial and industrial purposes. (b) For marketing purposes in the dry salt industry, there are two basic salt products, rock salt and evaporated salt. Rock salt and evaporated salt are functionally interchangeable for many uses. However, evaporated salt is used for some purposes for which rock salt. mav not. be feasible, desirable, or advisable. (c) The terms “sodium chloride” or “salt.” as used in this complaint, refer to salt as produced and sold commercially in a dry state and include both evaporated salt and rock salt. As used herein, said terms do not include brine such as that which is produced and consumed by the chemical industry and is not marketed as dry salt. (d) Sodinm chicride. or salt, is produced by salt producers in the United States by means of three basic production methods, dry mining, solution mining and solar production. (e) The preduction by drv mining involves the sinking of mine TROT IT eae Complaint 56 F.T.c.

shafts into underground salt beds or domes from which rock salt is excavated and transported to the surface. The excavated rock salt is then processed by being crushed, screened and refined into various types and grades of salt. The sodium chloride produced by this process is known as rock salt. Rock salt after being mined may be, and sometimes is, reduced to artificial brine from which evaporated salt is produced.

(f) The production by solution mining involves the extraction of salt from underground salt beds and domes by means of the injection of water into such cavities that melts the salt and forms wells of artificial brine. The brine is then pumped to the surface and evaporated. The salt resulting from the evaporation is then processed and refined into various types and grades of salt. The sodium chloride produced by this process is known as evaporated salt. This method of salt production is employed where the salt deposits are so far below the earth’s surface as to make it impractical or impossible to remove the rock salt. by sinking mine shafts down into such deposits.

(¢) Solar production is another method of producing evaporated salt. This method involves the use of sea water, salt. water from lakes or other natural brines which is evaporated from beds by exposure to the sun. The resulting salt in the beds is then processed and refined info various types and grades of salt. (h) Sodium chloride produced by any of these three basic production methods mav he processed or refined to meet. particular user specifications or preferences with respect. to the size and shape of the salt crystal, as well as the chemical and/or biological purity of the salt. In addition. various chemicals and/or minerals are sometimes added to either rock salt or evaporated salt’ to meet user specifications.

Par. 4. (a) Prior to January 1957, Diamond Crystal and its predecessors and Jefferson Island were. and had been for many vears, substantial drv salt. producers. Diamond Crvstal’s two salt producing plants had a total annual productive capacity of approximately 495.000 short tons of evaporated salt. Approximately 255.000 short tons of this capacity. or 52 percent. consisted of Alberger evaporated salt. approximately 215.900 short tons. or 43 percent, vaenum pan evaporated salt. and approximately 25,000 short. tons. or 5 percent. pressed block salt. The pressed block salt capacity could be. increased approximately 25.000 short. tons or an additional 5 percent. by decreasing the Alberger or vacuum pan capacities. (b) Jefferson Island’s plant had a total annual productive capacity of approximaiely 700,000 short tons of salt of which approxi- DIAMOND CRYSTAL SALT CO. - 893 818 Complaint mately 665,000 short tons, or 95 percent, consisted of rock salt and approximately 35,000 short tons, or 5 percent, consisted of vacuum pan evaporated salt. Of the approximately 665,000 short tons of rock salt capacity, approximately 80,000 short tons, or 4 percent, consisted of pressed block rock salt. (c) In 1955, Diamond Crystal was the fourth largest dry salt producer in the United States, with shipments of 484,048 short tons of dry salt, or 4.7 percent of all dry salt sold or used by the dry salt producing industry. Diamond Crystal was the third largest producer of evaporated salt, as its shipments of 484,043 short tons represented 10.9 percent of all evaporated salt sold or used by the dry salt producing industry in the United States in 1955. (d) In 1055, Jefferson Island was the sixth largest dry salt producer in the United States, with shipments of 388,771 short tons of dry salt, or 4.2 percent of the total dry salt sold or used by the dry salt producing industry. Jefferson Island was the third largest producer of rock salt sold or used in 1955 in the United States, as its shipments of 865,548 short tons of rock salt represented 6.9 percent of the total rock salt sold or used by the dry salt producing industry. Jefferson Tsland also shipped 23,228 short. tons of evaporated salt, or .6 percent of the total evaporated salt sold or used by the dry salt producing industry in the United States in 1955. Pan. 5. (a) The dry salt mdustry in the United States is highly concentrated in that the six largest dry salt. producers, including Diamond Crystal and Jefferson Island, shipped in excess of threefourths of the total dry salt sold or used in the United States in 1955. The dry salt producing industry in the United States, ineluding Hawaii and Puerto Rico, in 1955 consisted of 48 dry salt. producers, which sold or used 5.298.282 short tons of rock salt and 3.986.967 short. tons of evaporated salt, or a total of 9,280,249 short tons of dry salt. In 1955 the six largest dry salt producers in the United States shipped 7,281,859 short tons. or 78.5 percent of the 9,280,249 short tons of the total dry salt sold or used by dry salt producers in the United States.

(b) Of the 5,298,282 short tons of rock salt sold or used by dry salt producers in the United States in 1955, the three largest rock salt. producers, including Jefferson Island, shipped 3,661,299 short. tons of rock salt, or 69.1 percent, of the total rock salt sold or used hy dry salt producers.

(c) Of the 3.986.967 short. tons of evaporated salt sold or used hy dev salt producers in the United States, including Hawaii and Puerto Rico, in 1955 the five largest evaporated salt. producers, including Diamond Crystal, shipped 2,984,859 short tons of evaporated §24 FEDERAL TRADE COMMISSION DECISIONS Complaint; 56 F.T.C.

salt, or 74.9 percent of the total evaporated salt sold or used by dry salt producers.

(d) In 1940 there were 62 dry salt producers in the United States, including Hawaii and Puerto Rico, which sold or used 5,048,289 short tons of dry salt, as compared with the 48 dry salt producers which sold or used 9,280,249 short tons of dry salt in 1955. Between 1940 and 1955, the number of dry salt producers in the United States decreased by 14 or 22.6 percent, while the amount of dry salt sold or used by the dry salt producing industry increased 4,281,960 short tons, or 88.8 percent.

(e) The dry salt producing industry is difficult for a new producer to enter. Entry into the business is limited because of the heavy capital outlays required for resources, plant and equipment; the unavailability to new entrants of commercially usable salt resources; the large expenditures required to obtain business and overcome public acceptance of entrenched suppliers and brands; the inelasticity of demand for salt: the high degree of concentration of resources and production facilities in the industry; and the substantial idle capacity in the industry.

Par. 6. On or about January 4, 1957, respondent entered into an agreement to purchase not less than 90 percent of the 40122 issued and outstanding shares of common stock of Jefferson Island at $125.00 per share or in excess of $5.000.000 in the aggregate for all of the 40,122 issued and outstanding shares. This agreement, was consummated on or about January 10, 1957, and respondent. thereby acquired control and ownership of Jefferson Island. Respondent. operated Jefferson Island as a subsidiary until on or about April 1, 1957, after which Jefferson Island was dissolved and its assets and business were merged into respondent.

Par. 7. (a) Prior to Jannary 1957, substantial competition, and substantial potential competition, existed between Diamond Crystal and Jefferson Island. and between them and others. in the sale and distribution of dry sodium chloride in interstate commerce in the area of the United States. East of the Rocky Monntains. and especially in the southeastern part of the United States in the nine state aren of Lonisiana, Mississippi, Alabama. Florida, Georgia, Sonth Carolina. North Carolina, Kentucky and Tennessee and in various parts thereof.

(b) In 1955, Jefferson Island ranked third in dry salt. shipments in the aforesaid nine state area. Jefferson Island shipped 229,636 short tons of dry salt. or 21.4 percent. and Diamond Crvstal shipped 98.952 short. tons of dry salt. or 3.6 percent of the 1.072.347 short tons of dry salt sold or used in the said nine state area in 1955. DIAMOND CRYSTAL SALT CO. 825 818 Complaint On the basis of the 1955 shipments, Diamond Crystal now has 25 percent of the dry salt business and ranks third in the industry in the said area.

(c) The shares of the dry salt market which Diamond Crystal and Jefferson Island had in each State of the aforesaid nine state area in 1955, and, on this basis, the combined share of said market that Diamond Crystal now has as a result of the acquisition is as follows:

Diamond State Diamond Jefferson Crystal and Crystal island Jefferson Island Lonisiana___...---.---------------------- 22-2 eee -- 3 39.5 39.8 Mississippi. 2.7 17.3 20.0 faham 2.3 18.8 21.1 orid 1.4 17.2 18.6 Georeia. 4.5 15.3 19.8 South 5.3 14.1 19.4 North C 6.6 15.2 21.8 Kentuck ---- wee 3.1 22.9 26.0 ‘Tonnessee....2--------- +2 --- eee en eee eee eee eee 6.8 19.7 26.5 (ad) On the basis of 1955 shipments of dry salt in the aforesaid nine state area, Diamond Crystal and the two largest dry salt producers in the United States now control over 90 percent of total shipments of dry salt made in said area. On this basis, the acquisition increased the share of the nine state area market. held by the three Jargest dry salt producers doing business in said market. from 86.6 percent to 90.1 percent. On the basis of 1955 shipments, the combined share of the dry salt market which Diamond Crystal- Jefferson Island and the two largest dry salt producers in the United States now contro] in each State of the said nine state area, as a result. of acquisition, 1s as follows:

State of destination Percentage of shipmenta Louisiana -2-2---2-..-----+-------------------------------+----- 90.0 Mississippi -------------..-------------------------~----------- T1A Alabama -L-~------------------------------~-------+------------ 93.4 Florida 2---------------------------------~---------------+---- 85.0 Georgia -.---------------------------------------------------- South Carolina North Carolina Kentucky __---------~--------------------+------------------- Tennessee ~__...-.-------------~-----~-------------------------- (e) In 1955, Diamond Crystal shipped 58.252 short tons of evaporated salt. or 16.1 percent, and Jefferson Island 12,752 short tons of evaporated salt, or 54 percent of the 237,121 short tons of evaporated salt shipped in the aforesaid nine state area. Asa result of the acquisition, Diamond Crystal, on the basis of 1955 evaporated §26 FEDERAL TRADE COMMISSION DECISIONS Complaint 56 F.T.C.

salt shipments, now has 21.5 percent of the evaporated salt shipments in the said area market.

The shares of the evaporated salt market which Diamond Crystal and Jefferson Island had in each State of the said nine state area in 1955, and, on this basis, the combined share of said area market. that Diamond Crystal now has as a result of the acquisition is as follows:

Diamond State Diamond Jefferson Crystal and Crystal Island ! Jetferson i Island Louisian 2.4 6.7 Mis 13. 10.0 Alabin 28. 6.0 urs pe snort [ox oc li.

M4 64 Wd BA (f{) On the basis of 1955 shipments of evaporated salt in the aforesaid nine state area, Diamond Crystal and the two largest dry salt producers in the United States now control over 78 percent of all shipments of evaporated salt made in said area market. On this basis the acquisition incrensed the share of the said nine state aren market held by the three largest. dry salt. producers doing business in said market from 73.2 pereenr to 78.6 percent. On the basis of 19545 shipments, the combined share of the evaporated salt market which Diamond Crvstal-Jefferson Island and the two largest dry salt producers in the United States now control in each State of the said nine state area, as a result of the acquisition, is as follows: State of destination: Percentage of sales Louisiana 2 - ------------------------------------+-------+----- Mississippi ..-.--.------.----.----------~----------------+----- Alabama oo-------------------~-----------------+-+--+------------ : Florida ----.-----------~-----------------~~------------------ Georgia op on. -------------- ------------ +--+ -- - oe ee South Carolina North Carolina Kentucky __---.-----------~----------------------------------- Tennessee ~_~-------------------------------------------------- Pan. & The aforesaid acquisition by respondent of Jefferson Tsland mav have the effect of substantially lessening competition or tending to erente A monopoly in the production and sale of dry sadium chloride. including both evaporated and rock salt, and in the production and sale of evaporated salt and of rock salt separaiely. in commerce. rs “commerce” is defined in the Clayton Act. nee eee egpee ee + DIAMOND CRYSTAL SALT CO. 827 818 Complaint More specifically, the aforesaid effects include the actual or potential lessening of competition or a tendency to create a monopoly in violation of Section 7 of the Clayton Act, as amended, in the following ways, among others:

(a) Actual and potential competition between respondent and Jefferson Island has been, and will be, eliminated in the production and sale of dry sodium chloride, including both evaporated and rock salt, and in the production and sale of evaporated salt and of rock salt separately, in the areas in which they competed, and especially in the aforesaid nine state area and in various parts thereof; (b) The acquisition of Jefferson Island substantially increases respondent's salt resources, productive facilities, share of the dry sodium chloride, and evaporated salt and rock salt markets, and overall position in the dry salt producing industry, thus increasing and enhancing respondent's competitive advantage over other dry salt producers to the detriment of actual or potential competition; (c) By substantially increasing the productive and competitive position of respondent in the areas designated which may be to the detriment of actual or potential competition ; (d) Jefferson Island has been permanently eliminated as an independent source of both rock salt and evaporated salt, and this may cause single line producers of either crushed rock salt or evaporated salt that. would otherwise have purchased from Jefferson Island to become dependent upon respondent, which is, or may be, one of their principal competitors:

(e) Jefferson Island has been permanently eliminated as one of the substantial independent producers of dry sodium chloride, including beth evaporated salt and rock salt and of evaporated salt and of rock salt separately, and is no longer a competitive factor in the areas designated ;

(1) Concentration generally has been further increased and enhanced in the dry salt industry in that the salt resources, production facilities and shares of the dry salt market held by respondent, and the two Jargest dry salt producers im the United States have been greatly increased which has been or may be substantially to lessen competition :

(¢) Entry into the dry salt prodneing business has been or may be discouraged because of the dominant position respondent. and two other dry salt producers now occupy in the industry in the areas in which they competed, and especially in the aforesaid nine state area, and in various parts thereof. which has been or mav be substantially to jessen competition:

(h) Actual and potential competition generally in the production AGISG9—G2 HE §28 FEDERAL TRADE COMMISSION DECISIONS Decision 56 F.T.C.

and sale of dry sodium chloride, including both evaporated and rock salt, and in the production and sale of evaporated salt and of rock salt separately, has been, and may be, substantially lessened, and industry wide concentration in the production and sale of such products, separately and collectively, has been or may be increased. Par. 9. The foregoing acquisition, acts and practices of respondent, as hereinbefore aileged and set forth, constitute a. violation of Section 7 of the Clayton Act (U.S.C. Title 15, Section 18) as amended and approved December 29, 1950.

ifr. William J. Boyd, Jr. and Mi. Arthur J. Hessburg tor the Comunission.

Dickinson, Wright, Davis, Uchean & Cudlip, by Mr. Edward P. Wright, of Detroit, Mich., for respondent. Initia, Decision By Water R. Jownson, Hesartnc Examiner In the complaint dated December 2, 19:

On February 9, 1959, respondent filed its answer to the complaint herein. A number of hearings were held for the reception of evidence in support of the allegations of the compiaimt. Thereafter, on November 16, 1959, there was submitted to the undersigned hearing examiner an agreement between respondent, its attorney, anc counsel supperting the complaint, providing for entry of a consent order to cease and desist and to divest.

Under the foregoing agreement, the respondent admits the jurisdictional facts alleged in the complaint. The parties agree, among other things, that the order to cease and desist and to divest there set. forth may be entered without further notice and have the same force and effect. as if entered after a full hearme and the document includes a waiver by the respondent of all rights to challenge or contest the validity of the order issuing in accordance therewith. The agreement further recites that it is for settlement purposes only and does not. constitute an admission by the respondent that it has violated the law ag alleged in the complaint. The hearing examiner finds that the content of the agreement meets all of the requirements of section 8.25(b) of the Rules of the Commission.

The hearing examiner having considered the agreement and proposed order. and being of the opinion that they provide an appropriate basis for settlement and disposition of this proceeding, the agreement is hereby accepted, the following jurisdictional fincings made, and the following order issued.

DIAMOND CRYSTAL SALT CO. 829 S18 Order .1. Respondent, Diamond Crystal Salt Co., is a corporation existing and doing business under and. by virtue of the laws of the State of Michigan, with its office and principal place of business located at 916 South Riverside Drive, in the City of St. Clair, State of Michigan.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent. ORDER (1) Zt is ordered, That respondent, Diamond Crystal Salt Co., shall divest itself absolutely, in good faith, of all right, title, and interest, real and personal, in the property described in the next succeeding paragraph of this order, located in the Seneca Lake region in the State of New York, consisting of whatever real estate, appurtenances, attachments, facilities, mining rights, and other interests in such property, which respondent acquired from the former Jefferson Island Salt Company at the time the stock, business, and assets of the said Jefferson Island Salt Company were acquired by respondent.

The aforementioned Seneca Lake property may be more particu- Jarly described as all that tract or parcel of land, situate in the Town of Reading, County of Schuyler, and State of New York, Iving east of the Northern Central Division of the Pennsylvania Railroad, bounded on the east by the shores of Seneca Lake, on the north by Jands of William Davis, on the west by lands of the Northern Central Division of the Pennsylvania Railroad, and on the south by lands of the Watkins State Bank; being that portion of the so-called Baker Farm lying east of the aforesaid railroad consisting of 16 acres of land more or less; together with mining rights on that portion of the Baker Farm lying west of said railroad and east of the so called Lake Road, consisting of 54 acres of land more or less.

Such divestiture shall be completed within six months from the date of this order, and shall consist of the disposition by respondent of all right, title, and interest, real and personal, in the above. described “Seneca Lake” property currently owned by respondent. Respondent. shall not sell or transfer any such right, title, or interest. directly or indirectly, to anv officer, director, emplovee, distributor, agent, or subsidiary of, or any one otherwise directly or indirectly under the contro] or influence of, respondent or any of its officers or directors, nor shall respondent. sell or transfer any such right, title and interest in said “Seneca Lake” property to any other salt. Order 56 F.T.C, producer whose annual production of dry salt averaged in excess of 850,000 short tons during the five calendar years, 1954-1958. (2) Lt ts provided, however, That if any property or interest: is not sold or disposed of entirely for cash, nothing herein contained shall be deemed to prohibit respondent from retaining, accepting, and enforcing a bona fide lien, mortgage, deed of trust, or other form of security on said property or other interest. for the purpose of se-urig to respondent full payment of the price at which said property is disposed of or sold, ancl (8) Provided further, That if, after a good faith divestiture of the aforesaid property or interest, the buyer fails to perform his purchase obligation to respondent and respondent thereby regains ownership or control over the aforesaid property, respondent shall recivest itself of the property and other interests within three monthis m the same manner as ordered originally.

The term “salt” as used herein, shall mean a mineral containing recoverabie sodium chloride in commercial quantities. The term “commerce” as used herein shall mean “ commerce” as defined in the Clayton Act, as amended.

(4) Lt is further ordered, Yhat for a period of ten years from the cate of issuance of this order by the Federal Trade Commission. respondent shall cease and desist. from acquiring, directly ov indirectly, through subsidiaries or otherwise, by merger, consolidation. or purchase, the physical assets, stock. share capaital of, or any other interest In any cerporation, In commerce. engaged in the business cf producing and/or distributing salt in any form, specifically including salt. in a dry state produced by any dry mining method, or preduced by an evaporation method, and salt in brine. (5) It is further ordered, That if at any time after ten vears from the date of issuance of this order by the Federal Trade Commission. respondent intends to acquire. directly or indirectly, through subsidiaries or otherwise, by merger, consolidation, or purchase. the physical assets, stock, share capital of, or any other interest in anv corporation engaged in the business of producing and/or disiributing salt. as hereinbefore described, in any form. in commerce, or respondent intends to sell, merge, ov consolidate the whole or any part of its stock or other share capital. or the whole or any part of its assets, With another corporation, in commerce. respondent shall notify the Commission at least 90 davs prior to the effective date of the proposed acquisition, consolidation, merger. or sale, and submit to the Commission, for its consideration full and complete disclosure of the facts with respect to such proposed acquisition. cousclidation. merger, or sue, and the reasons therefor. oo (eX) bY DIAMOND CRYSTAL SALT CO.

818 Order Nothing contained in either of the two preceding paragraphs shall preclude respondent from buying or selling, from any seller or to any buyer, physical assets retired by it or by the seller from salt production or not directly related to the production of salt. (6) Lt is ordered, That for a period of ten years from the date of the issuance of this order by the Federal Trade Commission, respondent shall cease and desist from selling more than 70% of the total annual production of Rock Salt mined at the respondent's plant at Jefferson Island, Louisiana until amounts not exceeding 30% of such Rock Salt have been made available in good faith in accordance with respondent’s regular credit requirements, and at respondent's regular prices, terms and conditions, and in weights and packages, types and grades, regularly produced at respondent's Jefferson Island plant, to all other producers of salt for sale who do not have resources and facilities for the production of Louisiana Rock Salt by means of a dry mining method (or who, to the knowledge of respondent, are not owned or controlled by others possessing such resources and facilities), the amount to be offered in each of respondent’s fiscal years to each such qualifying producer to be not Jess than the largest amount purchased by any of such qualified producers in any one of the five years prior to respondent’s acquisition of Jefferson Island Salt Company. After any such producer shall have purchased such Rock Salt from respondent for three consecutive fiscal years after the date of this order in an aggregate amount. not less than its total annual entitlement hereunder, respondent shall on such producer's request negotiate in good faith with such producer for a long term contract. to provide such producer with such salt in an annual amount. not required hereby to be greater than 25,000 tons, or five percent. of respondent’s annual production at its Jefferson Island plant. whichever shall be the lesser amount: or any such producer may after such three year period, in lien of negotiating for such a Jong term contract, purchase annually thereafter 106 percent of the amount such producer had purchased in any preceding vear during the ten year period subsequent. to the date of this order. No such sales need be made on delivery schedules at a rate or rates which for any two consecutive calendar months would exceed 2/Ce of the total annual stipulated entitlement of the purchaser hereunder nor on delivery schedule incompatible with production limitations applying to particular types and grades. Respondent will be deemed to have made such Rock Salt available in good faith within the meaning of this paragraph inter alia. if it has during January of each calendar year made an offer in writing in accordance with the provisions of this order to every producer of salt. for sale known by it to be qualified hereunder. Decision 56 F.T.C.

(7) Provided, however, That nothing contained in the preceding paragraph shall require respondent to make available to the producers of salt for sale who qualify under the provisions of the preceding paragraph and to present non-consuming purchasers with long term contracts, an aggregate amount of more than 30% of its annual production of Jefferson Island Rock Salt. The term “annual production,” as used herein, shall mean (i) for any calendar year during the ten year period subsequent to the date of this order, the number of tons of Rock Salt produced for sale by respondent at its plant at. Jefferson Island, Louisiana in the preceding calendar year. and (11) for any period Jess than a calendar year, the number of tons of Rock Salt so produced during the corresponding period in the preceding calendar year. Nothing contained in this order shall be considered to have been, violated by any action or inaction of respondent over which respondent. shall have had no control, where such action or inaction shali have been occasioned by war, civil insurrection, strikes, embargoes, catastrophies, or Acts of God.

Jurisdiction is retained so that. respondent may at any time hereafter petition the Commission for construction or modification of this order which the Commission will consider and, upon proper showing by respondent, allow to the extent it. finds such construction or modification to be warranted and consistent with Section 7 of the Clayton Act, as amended.

DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE This matter having come on to be heard by the Commission upon its review of the hearing examiner’s initial decision filed on November 19. 1959, and the Commission having determined that. said initial decision is adequate and appropriate in all respects to dispose of this proceeding:

It is ordered. That the aforesaid initial decision be, and it hereby is, adopted as the decision of the Commission. It is further ordered. That. the respondent Diamond Crystal Salt Co. shall, within sixty (60) days from the date of service of this order, (1) submit a report, in writing. setting forth im detail the manner and form in which it has complied with Paragraphs 4, 5 and 6 of the order to cease and desist. and to divest contained in said initial decision. and (2) further submit. in writing. for the consideration and approval of the Commission its plan for compliance with Paragraph 1 of said order and its related provisions respecting divestiture, including the date within which compliance can be effected. the time for filing of report. of compliance with the SAMUEL A. MANNIS AND CO. 833 818 Decision order to divest to be hereafter fixed by order of the Commission and jurisdiction being retained for that purpose.

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