Diamond Alkali Cg:Ipaky

Text (OCR of the scan; may contain errors)

DIAMOND ALKALI CG:IPAKY

Docket 8572. Order and Opinion, March 4, 1966 Order denying respondent' s petition for reconsideration and its motion to reopen the record and supplement additional evidence.

OPINIOK OF THE COMMISSIOK

Respondent on December 9, 1965, filed a Petition for Reconsideration under 9 3.25 of the Commission's Rules and a Motion to Supplement or Reopen the Record for Purposes of Receiving Evidence. We are of the opinion that both petitions must be denied.

Since the objective of both motions is the same, that is, to secure further consideration of this matter by the Commission the two wil be treated herein together. The petition for reconsideration cites two grounds, namely, (1) under the Coms ruling in Tampamission's interpretation of the Supreme Court' Electric Company v. Nashville Coal Company, 365 U. S. 320 (1961), the evidence supports respondent's position with regard to relevant section of the country and (2) the Commission was wrong in using only shipment figures as a basis for determining market shares; it should have used both shipment figures and the unused capacity of the mills shipping to destinations within the 23 county area.

The motion to reopen and supplement is grounded upon asserted new evidence which demonstrates a post-acquisition change in market structure materially affecting the questions of relevant market, competitive effect and remedy.

In its first asserted ground for reconsideration respondent takes the position that the Commission interpreted Tampa as imposing a burden upon respondent to show that the suppliers to the 23 county area were "eager" to ship elsewhere and that those firms shipping substantial quantities of cement into the 23 county area were shipping elsewhere to a significant degree; and notwithstanding the inequity of the Commission's imposing this burden it has been sustained by the respondent. Apart from the merit of this contention, we must first determine whether respondent has met the threshhold requirements of S 3.25 of the Commission's Rules which states that the petition decision or must be confined to new questions raised by the final order and upon which the petitioner had no opportunity to argue;,efore the Commission.

We are of the opinion that even had the Com11.ission so interpreted Tampa this would not present a new question within the meaning of Rule 3.25. The question of relevant market was thoroughly briefed and argued and the interpretation ascribed to the Commission by respondent is in no sense a new question as to which respondent has had no opportunity to argue. Nevertheless, since respondent has chosen to interpret the Commission's interpretation of Tampa we think it necessary in the interests of clarity to dispose of the substance of respondent' contention.

The language which prompts respondent' s motion appears at page 6 (68 F. C. 1204, 1208) of the Commission opinion: In Tampa record evidence was found that the coal companies supplying Tampa were "eager " to ship outside the Georgia and Florida area. And according to the Supreme Court By far the bulk of the ov€nvhelming tonnage marketed from the same producing area as serves Tampa is sold outside of Georgia and Florida," We infer from this language that respondent here at least has the burden of coming forward .with some evidence meeting the criteria implicit in the court' s statement. But from our examination of the record, there is no evidence that the suppliers to the 23 county area were "eager " to ship elsewhere or that those firms shipping substantial quantities of cement into the area were shipping elsewhere to any significant degree. . . .

It was not our intention that the comparison between this case and Tampa should begin and end with the interpretation of the word "eager " nor that the decision in this case turn on that word alone or even on Tampa alone. In Tampa the Supreme Court held that the area of effective competition is determined by (l) the area in which the seller operates and (2) the area to which the purchaser can practicably turn for supplies. 365 U. S. 320, 327 (1961). Respondent emphasizes the first of these considerations at the expense of the second. The Commission found it necessary to weigh the two. Beca\lse of the peculiarities of cement distribution, the second of these two considerations becomes of substantial importance. In short, as was stated in S. v. Philadelphia National Bank 374 U. S. 321, 357 (1963), the proper area is that where. . . the effect of the merger on competition wi1 be direct and immediate. " In this case as in Tampa that area is, as outlined above, that in which the sener' operates and to which the purchaser can practicably turn for supplies. In Tarnpa the Court was satisfied that the relevant market embraced the 700 coal producers to whom the purchaser could practicably turn for supplies, that is, those firms who could serve the same market peninsula Florida. Their eagerness to sen elsewhere throughout the broad seven state area established that it was this broad area in which they were interested and that foreclosure from Tampa made no significant difference to them. In the present case the Commission is convinced from the evidence that purchasers in the 23 county area can practicably turn for supplies only to those firms shipping substantial quantities of cement into the area. To them what happens in the 2:1 county area makes a significant difference as demonstrated by the fact of their shipping substantial quantities there and their concomitant disinterest in shipping substantial quantities elsewhere. Thus, the area in which 100 % of the acquiring company standard" brand cement is sold and 66% of the acquired company's sales were made secured 90 % of its needs from companies with plants and terminals located therein. These companies make 75% of their total shipments to that area. Thus, it was this 23 county area to which the firms supplying substantial amounts were eager to selJ and to which they did sell in substantial quantities as is amply demonstrated by the record. Complaint counsel sustained his burden that this is the relevant section of the country. The burden of proof was never placed upon respondent as alleged in its petition for reconsideration. However, if it wanted to undermine the prima facie showing of complaint counsel, it had the obligation of going forward with evidence that the substantial suppliers were in fact not substantial suppliers or that this 23 county area did not make a significant difference to them and that they looked elsewhere, eagerly if you wiJ1, for sales or that the purchasers could practicably turn for supplies to a much broader area. Respondent had no burden in this regard initially of course and the Commission did not interpret Tampa as imposing such a burden. As was stated in the Commission's opinion, respondent had a duty to show, if it wanted to rebut complaint counsel's case, that the substantial shippers to the 23 county area were eager to ship elsewhere or that they were shipping elsewhere to a significant degree.

Respondent did not do this and does not propose to do it now. It proposes to show that those firms accounting for a minor fraction of total shipments into the 23 county area were eager to ship elsewhere. This is a logical inference from the fact that they ship most of their cement elsewhere. But it does not overcome the problem that the eagerness to ship elsewhere and the exigencies of cement distribution disqualify these firms in the first instance because they establish clearly that the purchasers in the 23 county area could not practicably turn to these firms for supplies.

This question was briefed and argued at all stages of this proceeding and was thoroughly considered by the Commission and adequately disposed of in the Commission's opinion. Respondent has not raised a:Jew question under 25 and its petition mustbe denied. Moreover, respondent' s contention that the substantial shippers into the 23 county area were shipping elsewhere to a significant degree does not warrant extensive consideration here. This is simply the assertion of a conclusion contrary to that reached by the Commission after its examination of the whole record. It is in no sense a new question.

The second asserted ground for reconsideration is that in calculating market share the Commission should have considered shipments plus unused standby capacity rather than shipments alone.

Here again respondent fails to satisfy the requirements of

25. This question was also briefed and argued and specifically adverted to in the Commission's opinion, and thus no new question is raised. We are satisfied that Crown Zellerbach Corporation v. 296 F. 2d 800 (1961), and Permanente Cement Co. D. 7939, April 24, 1964 (65 F. C. 410), were not misapplied and that on the record of this case in this industry sales or shipment figures rather than production or capacity figures, used or unuse - are more significant in calculating market sales. By its Motion to Reopen and Supplement also filed December, 1965, respondent seeks to have admitted into evidence a number of exhibits, two of which, it alleges, were cited in the Commission's opinion in this case and should therefore be admitted in evidence, while the others are affidavits attesting to post-acquisition structural changes in the market warranting admission into the record and consideration by the Commission. The basis for respondent's motion as to the first two exhibits RX 94 and 95, is apparently a reference in the Commission opinion to the sale of Plant B after the filing of the initial decision in this ll1atter 1 and a reference to the " , . . competitive huffng and puffing of firms such as L'S. Steel, Pittsburgh Plate Glass. . . ." 2 These references derive from statements in an affidavit of respondent's witness L. T. Welshans, RX 94, submitted to the hearing examiner, with a motion filed by respondent to supplement the record filed September 22, 1964, after the filing of the initial decision. This motion was never ruled upon. It is apparent from the context of the Commission's opinion that these references do not affect the result and were in no way crucial to the Commission's consideration of this matter. Therefore, since respondent itself advised us of these facts it cannot now be heard to say that it was prejudiced by these references. We see no reason for reopening the record on the. basis of this claim of respondent.

Exhibit RX 95 was an affidavit of one Henry G. Hohorst. It does not appear that any material from this affidavit was used ill the Commission's opinion.

In regard to the other affidavits which respondent seeks to have admitted in evidence, it can be said that they contain data 1 Commission Opinion, p. 2, footnote 2 l68 F, C. 1205l, and p. 12 (68 F. C. 12133. Commission Opinion, p. 10 (68 F, C. 1211). relating to changes in the post-acquisition market structure in the 23 county area.

Judging from their number, one might infer substantial postlittle moreacquisition changes. Examination shows, however, than the ebb and flow of competitive activity with minor changes in market composition and share. The material does not suggest the sort of radical change in market structure which warrants reconsideration of post-acquisition evidence. An appropriate order wi1 issue.

Commissioner MacIntyre did not concur.

ORDER DENYING PETlTlO:- FOR RECONSIDERATION AND MOTION

TO REOPEN AND SUPPLEMENT THE RECORD

The Commission on October 22, 1965 (68 F. C. 1204), having rendered its decision in this proceeding affirming the findings of fact contained in the initial decision of the hearing examiner, and issuing its order upon complaint counsel to file a proposed form of order and supporting memorandum within 30 days of service of the Commission's order and requiring respondent within 30 days of service of complaint counsel's proposed order to file its own alternative form of order and supporting memorandum, and Respondent on December 9, 196,5, having filed its Petition for Reconsideration and Motion to Reopen and Supplement the Record and the Commission having considered said motions and the answers in opposition thereto filed by complaint counsel

It is ordered That respondent' s Petition for Reconsideration and Motion to Reopen and Supplement the Record be, and they hereby are, denied.

It is further ordered, That within ten (10) days of service of this order complaint counsel shall file a proposed form of final order in this matter accompanied by a supporting memorandum. Within ten (10) days of service of complaint counsel' s proposed order respondent shall file its alternative form of order and supporting memorandum. Upon consideration of all material submitted, the Commission will enter its final order. Commissioner MacIntyre not concurring.