Benner Tea Company

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IN THE MATTER OF BENNER TEA COMPANY ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMl\IISSION ACT Docket 7866. Complaint, Apr. 19, 1960-Decision, July, 1961 Order dismissing complaint charging with knowing inducement of discriminatory payments from suppliers, a corporate operator of a chain of retail grocery stores which was sold more than a month prior to issuance of the complaint, resulting in complete change of ownership. M?' . John Pe?"ry for the Commission.

McDermott, Will Emery, by AI?'. James O. Smith of Chicago Ill. , for respondent.

INITIAL DECISION BY LOREN H. LAUGHLIN HEARING EXAMINER The Federal Trade Commission (sometimes also hereinafter refen' ed to as the Commission) on April 19, 1960, issued its complaint herein, charging the above-named respondent with having violated the provisions of S 5 of the Federal Trade Commission Act (D. certain particulars, and respondent was dulyTitle 15, S 45) in served with process.

On :May 8 , lU61, there was submitted to the undersigned hearing examiner, by counsel supporting the complaint, a 1\lotion to Dismiss, setting forth the following facts and circumstances: The above-mentioned complaint Was issued against Benner Tea Company, an Iowa corporation, with its office and principal place of business located at 3400 1\1t. Pleasant Street, Burlington, Iowa. states asMore particularly, Paragraph Five of the complaintfollows:PAR. 5. In the course and conduct of its business in commerce, and particularly since 1957, respondent has knowingly induced or received from some of its suppliers the payment, or contracts for the payment, to it or for its benefit, of money or other tJ1ings of value as compensation or in consideration for services or facilities furnished by or through respondent in connection with the sale or offering for sale of products sold to it by said suppliers. But such payments were not made available by such suppliers on proportionally equal terms to all their other customers competing with respondent in the sale and distribution of such suppliers' products. it was An answer was duly filed to the complaint herein; but filed by Benner Tea Company, a Delaware corporation, and not by Decision 5f1 F. Benner Tea Company, an Iowa corporation, respondent herein. Among other thing;;, said answer states as follows: Effective March 16, 1960 BTC, Inc., a Delaware corporation, purchased 100% of the stock of Benner Tea Company, an Iowa corporation, named as Respondent in the complaint herein, On March 31, 1960 Benner Tea Company, an Iowa corporation, ceased to exist by virtue of being merged into BTC, Inc" a Delaware corporatiop, which subsequently changed its name to Benner Tea Company, a Delaware col poration, which presently maintains its office and principal place of business at 3400 Mt. Pleasant St., Burlington, Iowa. From the facts stated in the answer, it is evident that the company against which the complaint was issued, namely, Benner Tea Company, an Iowa corporation, was not even in existence on the te of issuance of the complaint.

Because of these. facts, counsel supporting the complaint, on Xovember 23 , 1960, filed a ":Motion to Hearing Examiner to Certify Proposed Amende.d Complaint to Commission, transmitting there\with an amended complaint ,rhieh ,,'ould, in effect, substitute Benner Tea Company, a Delaware corporation, as respondent. Paragraph Four of the amended complaint stated: PAR. 4. Respondent Benner Tea Company, a Delaware corporation (hereinafter referred to as Benner (Delaware)), as legal successor to Benner Tea Company, an Iowa corporation (hereinafter referred to as Benner (Iowa)), is legally responsible for all the unlawful acts and practices of Benner Tea Company, an Iowa corporation, hereinafter alleged. On December 7, )960, the hearing examiner certified the proposed amended complaint to the Commission, and on December ::)0, 1960 the Commission denied the motion for amended complaint, stating in part as follows:

It further appearing that neither the motion nor the proposed amended complaint attached thereto sets forth a sufficient basis for the alleged responsibility of Benner Tea Company, a Delaware corporation, for the alleged unlawful acts and practices of Benner 'rea Company, an Iowa corporation occurring prior to the purchase by the former of the stock of the latter, or suflicient reason for the Commission to believe that a proceeding against Benner Tea Company, a Delaware corporation, would be in the public interest; and The Commission having determined that in these circumstances the motion for issuance of the amended complaint cannot be granted: It is o,' dered That said motion be, and it hereby is, denied ,.. If' * Thereafter, counsel supporting the complaint inquired into the ownership and the managerial setup of Benner Tea Company BENNER TEA CO. 121 119 Decision nn Io,ya corporation and as a Delaware corporation, and found t hat, the ownership has completely changed hands; the officers and directors ~'ho controlled and managed the business affairs of Benner Tea Company, an Iowa corporation, in no way control the business affairs of Benner Tea Company, a Delaware corporation. The o:B-1cers and directors of the new Dela "are corporation are not the :-;mne. as those of the old Io,ya corporation; nor does counsel supporting the complaint have any evidence that Benner Tea Company, a Dela~-are corporation, did or ~'ill continue the acts and practices of Benner Tea Company, an Iowa corporation, upon which the complaint herein was based.

The complaint herein, therefore, is now outstanding against a non-existing corporation, namely, Benner Tea Company, an Iowa corporation, and counsel supporting the complaint cannot, at this time, show sufl1eient basis for the alleged responsibility of Benner Tea Company, a Delaware corporation, for the alleged unlawful act;, and practices of Benner Tea Company, an Iowa corporation or sufficient public interest in a proceeding against Beliner Tea Company, a Delaware corporation, to justify the issuance by the Commission of an amended complaint herein. Counsel supporting the complaint is therefore of the opinion that dismissal of the complaint herein is justified and in the public interest, and respectfully requests that the hearing examiner dismiss the complaint against Benner Tea Company~' , an Iowa corporation. Gpon consideration of the record herein, the hearing exaE1iner concurs in the opinion of counsel supporting the complaint, that sn1c1 complaint should be dismissed. Accordingly, the hearing exmniner hereby grnnts the :Motion To Dismiss submitted by counsel snpporting the complaint, an(l issues his order to that eflect. as follows:

I t is orde)' ed. That the complaint herein, heretofore issued against Benner Ten Company, an Io,ya corporation, be, and the same hereby , dismissed.

DEC'ISIOX OF THE c(r.\nrISSICr::-, PuJ's1lfmt to Section ;3.21 of the Commission s Rules of Practice tlw inihn1 decision of the hearing examiner shnll, on the 25th day of .Tlll:' 1061 become the decision of the Commission. , ,, Complaint 59 F.