Cannon Mills Company

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IN THE MA'ITER OF CAN MILLS COMPANY OIlDEH , ETC., IX REG-e\RD TO THE ALLEGED VIOLATION OF SEC. 2 (a) OF THE CLAYTON ACT Docket 1'1-91:. Complaint, May 1959-Declsion, Apr. 24, 1964 Grder dismissing, for failure to praye a prima facie violation, complaint charging a ::ortb Carolina manufacturer of finished textie products, such as sheets and towels, \"itb discriminating in price in violation of Sec. 2(a) of the Clayton Act lJ ' sellng finger-tip tmvels to some customers in the Portland, Oreg" and \Yasbington, D.C. , areas at lower prices than it charged their competition.

COl\IPL.U)iT The Federal Trade Commission, having reason to believe that the above named respondent has violated and is now violating, Section 2(a) of the amended Clayton Act (15 D. , Sec. 13), hereby issues its comphint, stating its charges as follows: -\RAGRArH 1. Respondent is a corporation organized, existing, and doing business ul1ler and by virtue of the la,vs of the State of Korth Carolina, '\with its principal offce and place of business located at ICannapolis, Korth Carolina.

Respondent directs and controls the sales anel distribution policies of its wholly owned sales subsidiary, Cannon iills, Inc., of 70 ,Vorth Street, K ew Y or k City.

PAH. 2. R.respondent is enga.ged in the business of manufacturing, distributing, and selling finished textile products, such as sheets and towels. Respondent' s gross sales for the year ending December 31 1957, were in excess of $175 000 000. IR. j. These products arc sold by respondent through its ,vholJy owned subsidiary, Cannon :\iills, Inc., 70 ,Vorth Street, New York ew York, for use, comsumption, or resale within the United States and respondent ships or causes them to be shipped 'and transported frolll the state of location of its principal place of business to purchasers located in States other than the State in which the shipment or transportation originated.

PAn. 4. Respondent maintains a course of t;,'ade in commerce, as c011111crco': is defined in thc amended Clayton Act, in such products among and between the States of the United States. R.respondent maintains and operates a manufacturing plant at Kannapolis, North Carolina. From this plant it ships and sells, or causes to he shipped alld sold, throughout the United States, to vari. CANXQN MILLS CO. 409 408 Order ous purchasers located in the sever!!1 States of the United States, including Oregon.

PAR, 5. In the course and conduct of its business in commerce respondent is competitively engaged with other corporations, individuals, partnerships, and firms in the manufacture, distribution, and sale of the products stated above.

.\R. 6. In the course and conduct of its business in commerce. respondent is discriminating in price between different purchasers of its products of like grade and quality by se1Jing to some purchasers at higher and le::s favorable prices than it Eells to other purchasers competitively engaged in the resale of its products with the non-favored purchasers.

For example, respondent has participated in the periodic advertising and promotional plans of Fred l\Ieyer, Inc., of Portland, Oregon occurring anl1ually for many years, During September and October of 1956, respondent participated in the allnual coupon book program, for the participat.ion in which respondent sold fmger-tip towels, style No. 7205, to Fred :Meyer, Inc. , at $1.55 per dozen. The uormal price for the same goods of like grade and quality to competing customers at t.he same time. was $1.65 per dozen on quantities of 500 dozen or more and $1.75 per dozen for quantities of less than 500 dozen. m. 7. The eflect of respondent' s discriminations in price, as alleged, may be substantially to lessen, destroy, or prevent competition or tend to create a monopoly in the line of commerce in which respondent and its purchasers are engaged.

-\R. 8, The foregoing acts and prac6ces of the respondent, as alleged, violated Section 2(a) of the amended Clayton Act (15 U. See. 13).

Onder V AC \TING INITL\L DECIEIOX AND DIS fISSIXG CO:\IPLA.INl' This ease is before the Commission on the appeal of complaint counsel frolll the initial dec.ision of the hearing examiner, filed December 3 , 1963, 1Vhile finding a prima jam violation by respondent of Section 2 (a) of the Clayton Act, as amended, the examiner dismissed the complaint on t11e ground that respondent had succeeded in its cost-justification defense, lJpon examination of the record, the Com mission has conclude-d that the evidence of record is insuffcient to prove tl1c requisit.e adverse exerts on competition, Since a prima facie violation ,vas not proved, it is unnecessary to reach the merits of re spondent' s cost-justification defense. Accordingly, It -is olde-red That the initia.. decision of the examiner be, and it hereby is, vacated.

313-121--70--- Complaint 65 F, It is further ordered That the complaint be, and it hereby is, dismissed for failure of proof on the issue of probable injury to competition.