Schulze and Burch Biscuit Co.

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Ix THE MATTER OF SCHULZE AND BURCH BISCUIT CO.

CONSENT ORDER, BTC" IX REGARD TO THE ALLEGED VIOLATION OF SEG, 2, (a) AND 2(d) OF THE CLAYTON ACT Docket 7452. Complaint, Mar, 25, 1959-Decision, Feb, 7, 1964 Consent order requiring Chicago manufacturers of biscuit products-mainly cookies and crackers-to cease discriminating in price in violation of Sec. 2(a) of the Clayton Act by their use of a discount schedule which classified their retailer customers into (1) independents owning a single store, (2) chains and (3) voluntary groups of independents banded together for buy ing and advertising, and permitting chains and voluntary groups to combine purchases of all their stores for the purpose of computing the percentage bracket of the schedule to be granted;

And by paying advertising allowances to certain of their customers in accordance with the terms of an advertising plan which were not made known to many smaller competitors of those favored; and paying special advertising allowances to large chain and voluntary group customers which were not made available on proportionally equal terms to all of its competing customers, in viola tion of Sec. 2 (b) .

SCHl7LZE A:-.,T Bl7RCH BISCI IT CO. 529 528 Complaint Co:.IPh\n.n' The Fede-ral Tra.de Commissioll: ha \.-jng reason to beliere that Schulze llld Burch Biscuit Co" a corporation has violated and is now violating the provisions of subsection (a) and subsection (d) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act (l:. , Title 15 Sec. 13), hereby issues its complaint stating its charges with respect the,reto as follo\ys: COUNT I Charging a violation of subsection (a.) of Section 2 of the aforesaid Clayton Act, as amended, the Commission alleges: PARAGRAPH 1. SchuJze and Burch Biscuit Co., hereinafter sometimes referred to as respondent, is a corporation organized and existing under and by virtue of the laws of the State of Illinois with its headquarters and principal place of business located at 1133 West 35th Street, Chicago 7, Illinois.

PAR, 2. Respondent is now, and for many years last past has been a manufacturer distributor and seller of biscuit products which consist for the most part of cookies and crackers. Respondent manufactures its biscuit products at its plant 10Cltted at Chicago, illinois. Respondent distributes and sells its biscuit products of like grade a.nd quality to a large number of purchasers located throughout many States of the United States for use, consumption and resale therein.

R.esponde,ncs business is substantial with gross sales in excess of $17 000 000 for the fiscal year 1957.

PAR. 3. Iu the course and conduct of its said business respondent is no\Y, and for many years last. past has been, shipping its biscuit products from the State in which they are manufactured to purchasers located in other St.ates, in a constant current of commerce, as commerce" is defined in the aforesaid Clayton Act. PAR. 4. Respondent sens in excess of 90 percent of its biscuit products to retail food dealers who in turn rcse11 these pro duets to the consuming public.

Respondent delivers its biscuit products directly to the stores of its retail food dealer customers in respondent's own trucks. Respondent classifies its retail food dealer customers into three categories. The categories are, inl1epenclents, chains and voluntary groups, 530 FEDERAL TRADE COM:\ISSION DECISIOKS Complaint 64 F.

In the independent catagory are those customers who own and operate one retail store. The chain category consjsts of those customers who own more than one retail outlet. Voluntary groups are organizations comprised of a number of independently owned stores who band together for purposes of buying merchandise and advertising.

,With regard to said chain and voluntary group customers it is respondent' s normal practice to make deliveries to each separate store or ou.tlet belonging to the chain or voluntary group. PAn. 5. In the course and conduct of its said business in eommeree, respondent Schulze and Burch Biscuit Co. has discriminated in price in the sale of its biscuit products by seHing such products of like grade and quality at different prices to different and competing purchasers.

Illustrative of such sales at discriminatory prices are the following practices of said respondent;

Respondent is now using, and for several years last past has used the following discount 6schedule in pricing its biscuit products of Jike grade and quality which it sells to its retail food dealer customers many of whom compete with each other, based upon the monthly volume of purchases of such customer:

Percent of discountrnderJlonth/y$20.00_-- - --- --- ---- purchases--- n - - - --- _u -- $20. 00 to $39.99_-- -- -- ---- - -- - - --- - --- - - - - -- -- - - -- - - u $4. 00 to $74. 99- -- -- -- - 3'/2 875. 00 and over ------- -------- 4 Respondent makes the above stated discount schedule available to a11 its retail food deale-r customers, however in the case of all its chain category customers and certain of its voluntary group cat.egory customers respondent permits the purchases of all the stores or retail outlets comprising such chain or voluntary group to be combined for the purpose of computing the percentage bracket of the abm' stated schedule that such customers are to be granted, As a result each of these chain or voluntary group customers is consistently granted the maximum discount of the above stated schedule even though in many insta.nces the purchases of individual stores or retail outlets belonging to such chain or voluntary group customers standing alone would not be suffciently large to qualify for that percentage bracket. PAIL 6. The effect of said discriminat.ion in price by respondent. in the sale of biscuit products has been Or may be substantially to lessen injure, destroy or prevent competition:

(a) Between retail food dealer purchasers of respondent's products who receiye discounts computed under the above stated schedule and competing retail food dealer purcha,sers who receive none; SCHVLZE AND BURCH Blue-CIT CO, 531 ;:28 Complaint (b) Between retail food dealer purchasers of respondent' s products "\ ho receive discounts computed under the higher brackets of respondent' s above stated discount schedule and competing retail food dealer purchasers who receive discounts computed under the lower brackets of respondent' s same discount schedule, 7. The discriminations in price herein alleged are in violation of subsection (,,) of Section 2 of the Clayton Act, as amended. COUNT II Charging a violation of subsection (d) of Section 2 of the aforesaid Clayton Act, as a.mended, the Commission alleges: PAR. 8. Paragraphs One through Four inclusive of Count I of this complaint arc hereby set forth by reference and made a part of this count as fully and with the same effect as if quoted here verbatim.

PAR, 9. In the course and conduct of jts business in commerce as a.foresaid, respondent Schulzc md Burch Biscuit Co, has paid or authorized payment of money, goods or other things of value to or for the benefit of some of its customers as compensation or in consideration for services or facilities furnished or agreed to be furnished by or through such customers in connection with the handling, sale or offering for sale of respondent's biscuit products and respondent has not made or offered to make such payments, allowances or consideration available on proportionally equal terms to a11 of its other customers competing with the customers so favored in the sale and distribution of its biscuit products.

PAR. 10. Illustrative of the conduct alleged in Paragraph g above, are the following acts and practices of respondent: (1) Respondent is now paying and for several years last past has pajd advertising allowances to certain of its customers in accordance with the terms of an advertising plan it has devised, but respondent has neglected to make the terms of this plan known to many of its smaller competing customers, and consequently many of these smaner customers have not received and are not now receiving anything in the way of advertising allowances froln respondent. (2) In addition to the advertising plan mentioned in subparagraph (1) above, respondent is now paying, and for se\Teral years last past has paid, special advertising allowances t.o a certain select group of its customers, consisting primarily of large chain and large voluntary group customers, but has not paid or offered to pay such special advertising allowances to ot,her customers many of whom are in competition ,,,ith the customers so favored. These special adver- 532 FEDERAL TRADE CO \IJ\ISSIOK DECISroXS Initial Decision 64 F.

tising allowances are generally the result of individual negotiations wi th each of the customers so favored.

PAn. 11. Respondent' s acts and practices as alleged in Paragraphs 9 and 10, above, are in violation of subsection (d) of Section 2 of the aforesaid Clayton Act, as amended. Brown, FOJJ Blumberg, by Ml'. Nathan S, BZurnbel'g, Chicago Ill., for respondent.

)Jf r. James R, FT'lwlderrnan for the Commission. INlTIAL DECISION BY ,VALTER R.. JOHXSOX, HEARING EX.L'IlXER In the complaint dated March 25 , 1959, the respondent is charged with violating the provisions of subsections (a) and (d) of Section 2 of the Clayton Act, as amended.

On November 7 1960, the respondent and its attorney entered into an agreement with counsel in support of the complaint for a consent order.

Under the foregoing agreement, the respondent admits thc jurisdictional fa,cts alleged in the complaint. The parties agree, a,among other things, that the cease and desist order there sct forth may be entered Vlithout further notice and have the same force and cheer as if entered aftet a full hearing and the documcnt indllcles a waiycl' by the respondent of all rights to challenge or contest the validity of the order issuing in accordance, therewith, The agreement further rec.items that it is for settlmnent purposes only and does not constitute an admission by the respondent that it has vjolated thc law as alleged in the complaint.

The hearing examiner finds the content of the ag-reement meets a11 of the requirements of Section 3.25 (b) of the Rules of the Commission.

The agreement is entered into subject to the condition that the effective date of the initia.1 de,cision based hereon shall be stayed by the COITunission and shah not be,come the decision of the Commission in this matter until the cases of Robert A. Johnston Company, Dockp. 581 herein:J, and Uni ted Biscuit Oompany of Am-edca-et 773H, I Docket 7817 (p. 586 hereina, have been litigated and decisions on the merits thereof have been issued by the Commission or sajd cases have, been disposed of by means of consent settlements. The agreement further recite,s that the right of the Commis jon to enter a cease and desist order based on the agreement is in no way SCHULZE AND BURCH BISCUIT CO. 533 528 Initial Decision conditioned on the issuanee of similar cease and desist orders by the Commission in the cases referred to al;ove. The hearing examiner being of the opinion that the agreement and the proposed order provide an appropriate basis for disposition of this proceeding as to a11 of the parties, the agreement is hereby accepted and it is ordered that the agreement shan not become a part of the offcial record of the proceeding unless and until it becomes a part of the decision of the Commission. The following juridictional findings are made and the following order issued. 1. Respondent Schulze & Burch Biscuit Co. is a corporation existing and doing business under and by virtue of the laws of the State of Illinois, with its offce and principal place of business located at 1133 West 35th Street, in the city of Chicago, State of Ilinois. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent. ORDER It is ordered That respondent Schulze & Burch Biscuit Co" a, corporation, its offcers, employees, agents and representatives, directly or through any corporate or other device, in or in connection with the sale of its biscuit products in commerce, as "commerce" is defined in the Clayton Act, as amended, do forthwith cease and desist from: Discriminating, directly or indirectly, in the price of such products of like grade and quality, by sellng to any purchaser at net prices higher than the net prices charged any other purchaser competing in fact with such unfavored purchaser in the resale and distribution of such products.

It i8 further o'rdeTed That respondent Sehulze & Burch Biscuit Co" a corporation, its offcers, employees, agents and representatives directly or through any corporate or other device, in or in connection with the sale of its biscuit products in commerce, as "commerce " is defined in the aforesaid Clayton Act, as amended, do forthwith cease and desist from:

l\laking or contraeting to make to or for the benefit of any customer, any payment of anything of value as compensation or in consideration for any advertising or any other services or facilities furnished by or through such c.customer in connection with the handling, offering for res,de, or resale of responde,nt' s products, unle.s8 such payment. is in fa.ct made ava.ilable on propor tionally equal terms to a11 other customers competing in the (listribution of such products.

534 FEDERAL TRADE CO:\lmission DECISIONS C()mplaint 64 F, DECISION OF THE Co:)unSSION AXD ORDER TO FILE REPORT OF COM- PLIAXCE The hearing examiner, on Kovember 25 , 1960, having filed his initia.l decision in this proceeding accepting an agreement containing a consent olde.r to cease, Hnd desist theretofore executed by respondent and c011118e1 supporting the complaint, which agreement is subject to the c.ondition that said initial decision is not to become the decision of of the Commission "until the cases of Robert A, John-stan Oompany, Docket. Tied (p. 581 hCl'einJ and United Biscnit Company of ATlLel'ica. Docket 7817 rp. 586 hereina, have been litigated and decisions on the merits thereof have been issued by the Commission or sa.id cases have been disposed of by means of consent settlements; and The Commission, on the 5th day of February 1964, having issued its decisions ill t.he aforesaid matters:

It is o.rdencl That the initial decision of the hearing examiner be and it hereby is, adopted as the decision of the Commission. 1 t further o.rdered That respondent, Schulze & Burch Biscuit Co., shad, within sixty (60) days after service upon it or this order file with the COl1unission a report, in writing, setting forth in detail the manner and form in -which it has complied1With the order to cease and desist.

Commissioner Elman concurring ill the result and Commissioner Reilly not participating.