Alliance Associates, Inc.

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IN THE :MATTER ALLIANCE ASSOCIATES, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2 (C) OF THE CLAYTON ACT Docket C-1339. Complaint, May 20, 196B-Decision, May 20, 19GB Consent order requiring a Coldwater, :\1icb., grocery brokerage firm t.o cease paying or receiving illegal brokerage fees, in violation of Section 2 (c) of the Clayton Act COl\IPLAINT The Federal Trade COllll111ssion, having reason to believe that the parties respondent named in the caption hereof, and herein after more particularly described, have been and are violating the provisions of subsection (c) of Section 2 of the Clayton Act, as amended, (15 U.S. C. &13) hereby issues its complaint, stating its charges with respect thereto as follOlYS :

-\RA.GRAPI-I 1. Respondent Alliance Associates, Inc., is a corporation organized, existing and doing business under and by virtue of the la"\ys of the State of ~Iichigan, "\with its office and principal place of business located at 605 ,Vest Chicago Stre. , Coldwater, :Michigan. This organization is a closed corporation, the majority of the outstanding stock being owned or controlled by respondent E. Lee Feller. AR. 2. Respondent E. Lee Feller is president of the corporate respondent and is also a member of its board of directors. He formulates directs, and controls the acts and practices of the corporate respond- ALLIANCE ASSOCIATES, INC. , ET AL. 951 950 Complaint ent, including the acts and practices hereinafter set forth. His address is the same as that of the corporate respondent. PAR. 3. R.respondent Alliance Associates, Inc., is now, and for the past several years has been, engaged in the brokerage business, purportedly representing various sellers located throughout the U niteel States in cO1111ection with the sale and distribution of products sold in grocery stores. In representing such sellers in sales to various buyers respondent Alliance Associates, Inc., is paid a commission or brokerage fee by such sellers.

PAR. 4. Respondent Alliance Associates, Inc., in the course and conduct of its brokerage business, has been, and is now effecting the sale and distribution of products sold in grocery stores in commerce, as commerce" is defined in the Clayton Act, as Rmended for sellers 10eated in the various States of the United States other than the State of ~1iehigan in which respondent is located. Said respondent has transported or caused such products, when sold, to be transported from the sellers' places of business to the buyers ' places of business located in other States. Thus, there has been at all times mentioned herein a eontinuous course of trade in commerce in the sale of such products by said respondent for sellers.

-\.R. 5. In the course and conduct of its business for the past several years respondent Alliance Associate, Inc., has entered into contracts and working agreements with a number of supermarkets, grocery chains and wholesalers, sometimes hereinafter referred to as buyers who purchase and resell products that are generally sold in grocery stores. Such products are purchased through the respondent Alliance Associates, Inc., from various sellers purportedly represented by the respondent as described in Paragraph Three. In many instances respondent receives open orders from buyers to secure merchandise from sellers regularly selling to such buyers or from new sources of supply . depending upon whether the terms of sales are most advantageous to the buyer. Among the supermarket and grocery chains having said arrangement with respondent Alliance Assoeiates, Inc., are the following: H. C. Bohack Co., Inc., Brooklyn, New York; P &; C Food ~rarkets, Inc., Syracuse, New York; Borman Food Stores, Inc., Detroit ~iichigan; Eberhard Foods, Inc., Grand Rapids, ~lichigan; Fishers Foods, Inc., Canton, Ohio; Oscar Joseph Stores, Inc., Toledo, Ohio; Fred ,V. Albrecht Grocery Co., Akron, Ohio; The Giant ~farkets Scranton, PeIlllsylvania; and Carlisle Food ~1markets, Carlisle, Pennsy 1 vania. ~10st of the merchandise purchased by these buyers through respondent Alliance Associates, Ine., carries a private label or private brand as distinguished from national label or brand merchandise. Re- 952 ;FEDERAL TRADE COMMISSION DECISIONS Complaint 73 F.

spondent Alliance Associates, Inc., has an understanding with the buyers that the latter will give priority consideration to purchasing all private label or brand me1'chandise from se11e1's through respondent. These private labels or private brands are owned either by the individual buyer or by respondent Alliance Associates, Inc. In some instances where the buyer owns the private label or brand they sell their intel'est in it to respondent for a nominal consideration. Respondent then grants a license to the buyer to use said label or bra.nd on merchandise purchased through respondent from various sellers. PAR. 6. Respondent Alliance Associates, Inc., renders valuable services, other than the purchasing services hereinbefore described, to the individual supermarket and grocery chain organizations referred to above. Respondent rurnishes to these buyers a service which consists or keeping them ad vised by bulletins and other"ise of the market conclitions and the prices or commodities offered for sale by the various selle1's some or 'whom compete "ith each other. Respondent, on behalf of the buyers, conducts tests on products sold by them in order to insure that the quality is satisfactory and represents the best value. The expenses incurred by such tests are paid in whole or in part by respondent. In addition, respondent renders at its expense, valuable advertising, promotional.l and developmental senTices ror the supermarkets and grocery chain buyer1's all of which are designed to increase the private label or private brand sales of such customers. These services include among others, the preparatioll and organization of promotional sales campaigns by supplying the personnel ,,-ho are responsible for planning, executing and supervising such activities. Besides furnishing the personnel and the concept of promotional campaigns, thl3 respondent also supplies the art-\Vork, pictorial displays, achertising mats and V;11'ious other material and services. Respondent Alliance Associates, Inc. represents to the supermarket and groce1'Y chain organizations that will expend approximately 30 percent of the brokerage ree or commissions it receives from selle1's on purchases by such custOlne1'S for the various services that it renders to them.

PAR. 7. In view of the relationship described above, respondent .i-\JIiance Associates, Inc. in the conduct. of its business is adino'I::: for and in behalf of the various buyers or has been subject to the direct or indirect control of such buyers. The acts and practices of respondent Alliance Associates. Inc. in accenting or receivil1Q' a brokerao'I::: e fee or commission from sellers Dn sales to the various supermarkets and grocery chain buyers in connection with such buyers' purchases in COll11l1erce of products sold in groce-ry stores amount to the payment by the seller of a brokerage fee or commission to an agent of the buyer ., , . , ., p .. ,, , .. ALLIANCE ASSOCIATES , INC. , ET AL. 953 050 Decision and Order In all of the buying-selling transactions hereinabove referred to, the brokerage fee or commissions are paid and transmitted by the seller to' and accepted and received by the respondent, Alliance. Associates Ine., upon the purchases of the Super'llMl;ket and grocery store organiza tions, ,yhile the said respond~nt is acting in fact for and in behalf of such buyers.

. PAR. 8. In addition, ,and without regard to Ylhether Allianee Assocjates, Inc. vas acting ror and in behalf of the buyer or selJel', the acts and practice's oif respondent Allianee. ~\.associates, Inc. in passing on a portion of the broker,lge fee or commission paid by the seller the buyers in the form of services nerformed and other com:;'ic1erations granted amount to the payment af n commission, brokerage or an allowance or discount. in lieu thereof to the buyers. PAR. D. The acts and practices or respondeat as heretofore alleged are in violation of subsection (c) of Section :2 or the Clayton Act, as amended by the Robinson-Patman Act.

DECISION AXD Onder The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereof with violation of subsection (e) of Section :2 of the Clayton Act, as amended, and the respondents having been served with notice of said determination and "dth a copy of the complaint the Commission intended to issue, together with a proposed form of order; and The respondents and could1sel for the Commission having thereafter executed an a~?:reement containing.Q' a consent order. an admission bv the respondents or all the jurisdictional facts set forth in the complaint to' issue herein, a state.ment that the signing of said agreement is for settlement puq)oses O'nly and does not constitute an admission by respondents that the lalV has been. violated as alleged in strch com, plaint, and waive.rs and other provisions as required by the Commission s Rules; and The Commission having considered the agreement and htlying ac-cepted same, and the agreement containing consent order having thereupon beenpJaced 011 the public record for a period of thirty (30) clnys~ no\\ in fnl,ther ronformitv with the procedure prescribed in 82.34 (11) of its Rules, the Commission here:by issues it:3 complaint in the form contemplated by said agreement, makes the follOlying jurisdictional findings, and enters the following order: 1. Respondent Alliance Associates, Inc., is n corporation organized exlstmg all(L nom!"!' USlness unCLeI', allen1 ov Yll't"ue or tlle a ws 0 41S-343-- i~---- .. ....

Decision and Order 73 F.

State of ~iichigan, with its office and principal place of business located at 605 ,Yest Chicago Street, Colcbyater, ~lichigan. Respondent E. Lee Feller is president of said corporation and is also a member of its board of directors. His address is the same as that. of said corporation.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents. ORDER It -is oJ'de'J'ed That respondents Alliance ~\ssoeintes, Inc., a corporation, and its officers. and E. Lee Feller. indiyiduallv and lisan officer and stockholder of ..:-\Jlianee Associates, Inc., andl'respondents ' agents representatives and employees, directly or through any corporate or other device, in .01' in connection ,with the purchase, in commerce, as commerce " is defined in the Clayton Act, as amended, of products sold in .QTocerv stores do fortlnyit h cease and desist from: CRec~iving or accepting. directly or indir('ctl~-. from any seller, anything of "alone as a commission. ul'okel'age 01' other C011lpensation, or any allo,,-ance or discount in lieu thereof. upon 01.' in connection ,,-ith any purchase of such products for the account of any buyer~~lso long as any relationship exists betv,een said brokerage organization and the buyer organization. either through o"nership, control or management. or ,,-here respondents ..AJlianre Associates, Inc., or E. Lee Feller is the agent. representation_ ' 01' other intermediary acting for or in behaH or is subject to the direct or indirect control of any buyer.

2. Directly or indirectly paying:, transmitting 01' ell? li H:'hnp: any buyer anvthin.Q.' of value as a COlllm ission. brokera.2-':". 01' other' compensation, or any allowance 01' discount in lieu thereof, rcceived from any seller, either in the form of rebates 01' selTiers. facilities or other benefits provide(I or furnished by respol1clents Alliance Associates, Inc., ore. Lee 1- eller to such btl~-el' It 28 ful'their' 0 j'(le i' Nl. That the respondent corporation shall forth- ",ith distribute. a copy of this order to each of its operating c1i,-isions. It i8 fudlwi' Oi'dei'ed. That tile respondents herein shall. ,,-within sixtv (GO) (L1YS after service upon them of this onlel file v.-itll the' Commission n, report. in "Titing' setting fort 11 in detail the mall11C'l' ~Ulcl form in ,,-which they have. complied ,,-ith this order. MAIN SEWING CENTER , INC. , ET AL. 955 Complaint