*1 INC., BROS., & A. G. SPALDING Petitioner,
v. COMMISSION, TRADE
FEDERAL Respondent.
No. 13277. Appeals States Court
United Third Circuit. 21, 1961.
Argued Feb. 22, 1962.
Decided March *2 Connelly, City R. New York Albert Calhoun, (John Roth, Arnold I. D. New Cravath, City, Moore, Swaine &
York City, brief), pe- on the York for New titioner. Washington, Hobbes, Alan B. D. C. Acting Morehouse,
(Pgad B. General largest manufacturers the four Jr., J. one of Carter, Miles Counsel, Jno. W. and distributors of Federal brief), Brown, on the amount- States, its sales United ing Trade Commission. $23,350,000. *3 KALODNER, STALEY Before Rawlings, charged It further that Judges. FORMAN, Circuit acquisi- prior and at the time of the engaged tion, in manu- the was likewise Judge. FORMAN, Circuit goods sale facture of and the athletic com- interstate (Spalding) thereof in Bros., distribution Spalding Inc. & G.A. and dis- merce to “other manufacturers tributors, sporting an order aside review and set seeks to depart- goods stores, (Com- Federal Trade Commission the stores, and others directing of ment houses mail order mission) itself it to divest throughout line that its the nation” and Raw- capital assets of stock and all the (Raw- in lings Manufacturing Company direct by Spalding and The lings) acquired distributed sold in it 1955. which Rawlings four that also one of upon the Commission’s order opinion based largest distributors acquisition manufacturers and concluding that States, goods Rawlings of of athletic in the United by Spalding violated § during amounted amended, of which Clayton Act, 64 Stat. sales $10,500,000. provides in to 1125, 18, which 15 U.S.C.A. § part pertinent follows: (cid:127) alleged complaint that also engaged corporation capital in com- acquisition of Rawl- “No stock directly acquire, or in- ings, Spalding shall one of merce has eliminated any part of directly, largest competitors manu- or in the whole four capital facturing other share the stock or its athletic and distribution of juris- Rawlings’s subject corporation goods acquired no line and has manufacturing Federal Trade Com- diction of the cer- to make facilities acquire goods or Spalding the whole mission shall had tain athletic which any part purchase of the assets of another compelled to theretofore been engaged corporation Rawlings also in com- manufac- some other or merce, any “may of com- where have acquisition turer and that the country, lessening section substantially merce com- the effect of petition acquisition may tending monopoly” effect of such to create a or substantially competition, to lessen manufacture, distribution sale monopoly.” to tend to create a goods of Section in violation of athletic Clayton 7 of the Act. Pleadings Proceedings and Prior Spalding In its answer admitted that complaint, 8, 1955, filed December acquired outstanding capital it all of the Commission, the Federal before charged, among Trade Rawlings 8, stock of on December 1955. things, the follow- prior stated to and at time allegations: is a cor- it manufactured cer- Rawlings poration of Delaware and largely tain athletic which it sold Missouri; 6, or about December through Corporation its Sales 1955, Spalding acquired all of out- nationally which distributed such items standing capital Rawlings; stock of together complementary items man- engaged Spalding is in the manufacture ufactured others and that the total goods and the sale and dis- of athletic its sales and those of Sales commerce thereof interstate tribution during Corporation 1954 amounted to distributors, “other manufacturers $18,783,639. stores, goods stores, department sporting golf houses, professionals and further stated mail order in its answer Rawlings basis”; engaged others on national likewise goods Spalding agreed, substance, to main- certain manufacture Rawlings pre-merger largely tain the status which it sold changes Sporting Company without distrib- and to make no therein Goods together nationally with advance the Commission. uted notice to such items complementary manufactured items Hearings 30, April commencedon and those others total with its sales Hearing before Examiner con- Company Sporting Goods intermittently through tinued December year amounting $8,282,505 for the witnesses 1958. The refusal of two produce documents called for sub- Spalding generally allega- denied other poenas in the in- duces resulted tecum *4 complaints tions contained in well the proceedings ter- of enforcement stitution minating favorably charge that, by acquisition as the its the Commission.1 Rawlings, the stock of it violated Section offering Spalding evi- rested without Clayton 7 of the Act. the and moved dismissal of dence complaint. properly Jurisdiction of this court is pursuant to, invoked upon, and venue is based Hearing Before the Examiner counsel Clayton Act, 11 Section 15 products for the Commission 19 selected 21, U.S.C.A. as amended. § Spalding manufactured and sold both Integration Rawlings Rawlings’s (including and those are facilities Spalding’s during pendency not sold both but manufactured the proceedings by both),2 as has been controlled “illustrative of the area in stipulation Rawlings support- acquisition a executed counsel which will ing complaint impact.” before the Commis- have a substantial economic Spalding, whereby They sion counsel for were: (irons) Volley clubs Golf balls (woods) Golf clubs Footballs balls Golf Football helmets Baseballs pads Football shoulder hip kidney pads Softballs Football gloves Baseball Basketballs Basemen’s mitts balls Tennis Catcher’s mitts Tennis racket frames Strung balls Soccer tennis rackets (fr¡ strung Badminton rackets) rackets ime and Spalding objection respect no substantial made effect merger to the consideration of list as select- primarily were based Hearing findings analysis The ed. Examiner’s an following product volley Spalding 1. v. Federal Trade Commission Tuttle balls. manufactured nine opinion unreported, (S.D.N.Y.), Rawlings rev’d 244 which items handled but did not (2 Cir.), manufacture, namely: balls, F.2d 605 cert. golf denied 354 U.S. tennis 925, 1379, 1 (1957); balls, 77 S.Ct. L.Ed.2d 1436 frames, badminton rackets Bowman, Trade v. frames, golf Federal Commission tennis rackets and clubs F.Supp. (N.D.I11.), (irons golf woods), bags golf aff’d 248 F.2d balls. (7 1957). 456 Cir. manufactured eleven items Spalding make, which handled but did Among by Spald- namely: mitts, gloves, handled masks, baseball leg body protectors, both guards, manufactured the football following baseballs, softballs, helmets, pads, six items: hip pads, kidney shoulder basketballs, footballs, pads, gloves striking boxing bags. soccer balls and softballs, Manufacturing baseballs, footballs, George vol- Co.,Inc., Reach lines: K. gloves Company ley balls, and baseball and Stall balls and Dean Manufac- soccer turing con- Company produced likewise sold The mitts. prod- partial line, great majority to the same fined its consideration but the single companies. uct lines. Hearing beginning Initial filed his had Examiner dismissing February 27, brothers, when two Decision Albert G. ground part- complaint Spalding, the evi- and J. on the Walter formed a nership effect equip- dence failed to that the establish sale baseball Rawlings by Spald- of ing ment at wholesale and retail. Later substantially may law, Brown, com- brother in to lessen T. was William monopoly, petition or tend to create partnership. admitted Clayton violation of Section partnership incorporated in Il- Act.3 linois under the name of A. G. Bros, & Bros. In 1892 A. G. & appeal An followed. the Commission incorporated Jersey. in New All effect Commission in reversed *5 capital following of the stock opinion cor- Initial and Decision order its porations 30,1960. of March ordered divestiture was transferred to New compliance plan and Jersey submission corporation: aof by Spalding days.4 within 60 Spalding G. Bros., 1. A. & corporation; Illinois The General Line Athletic Companies Goods Wright Ditson, 2. & a New Jer- sey corporation engaged in man- acquisition At the time of the there goods, ufacture of athletic with em- general were four so-called line com- phasis rackets; on tennis panies goods industry. in the athletic general A company line was considered orig- Company, 3. A. J. Reach variety one products which sells a inally partnership incorporated in directly through either subsidiaries. engaged 1885, principally about in single A company line one or markets the manufacture of baseballs and possibly a few addition lines. In gloves; baseball mitts and Spalding George Company, 4. Bernard & general companies, two other Wilson line Jersey engaged corporation a New Manufacturing Company, Athletic Goods in the manufacture of uniforms and (Wilson) MacGregor Sporting Inc. goods; knit (MacGregor). Products Inc. Spalding Manufacturing 5. Com- engaged The total number of firms pany, corporation an Illinois formed production goods ap- of athletic Bros, operate Spalding the A. G. & proximately 200. factory; baseball-bat acquisition gen- Prior to the the four Snyder, a 6. Peck & retail store companies eral (Wilson, Spalding, dealing City sport- in New York MacGregor Rawlings, order) in that ing equipment. principal producers were the of athletic products in the United There States. corporate It continued its existence Kennedy were a few such as change material without until the de- Sporting Manufacturing Company, Goods pression period of the 1930s. In reorganization Co., Hutchinson Leather Brothers Dubow another occurred as a Spalding Bros., Inc., Inc., 3. Bros., A. G. & Dkt A. & FTC G. Dkt FTC 6478, Reg.Rep. par. 27,858 28,694 (1959). 6478, Reg.Rep. par. (1960). Trade Trade earnings $222,524 in 1953 problem sales rose from of reduced solution to the Earnings $551,824 in 1955. invested a national which on of athletic million dollars In business one dropped exceeded level had about 60%. reorganized period year in the three and dividends Delaware as a was preferred paid common corporation present name both under its Twenty percent Inc., all former Bros., stock. & A. G. Jersey owned percent and 90 of the latter former New the assets of the distrib- corporation. six shareholders. many nationally products uted its time at the December by Spald- years prior engaged acquisition, Spalding was ing. general line and sale of manufacture capital Rawlings’s Spalding acquired goods. consists full of athletic Its $5,698,000. articles, approximately in- stock for different of more than 1100 basketball, Rawlings Manufacturing Company was football, golf, cluding baseball, Spald- immediately volley soccer, tennis, ball, dissolved ing thereafter. badminton clothing the Raw- boxing continued equipment, its business using factory lings products. Division of main related Its Rawlings Manufacturing Company. Chicopee, Massa- name executive offices by Spalding Among Through wholly-ownedsub- taken over the assets chusetts. Rawlings Sporting Corporation, Goods sidiary, Spalding was the Sales stock subsidiary wholly-owned through Company, whole- distributes its Rawlings, com- distributing depots offices sales sales sale throughout bearing the Raw- pany principal for merchandise located cities *6 lings ac- existence It remains in of trademark. time United States. At the Corpora- $16,- competing to quisition Sales its amounted assets products 665,299 finished tion for same customers and of its sales $23,200,737. in 1955 amounted to general companies, Another of the line organized Rawlings Wilson, originally in was was in 1910 founded Manufacturing Louis, by George Company, a Missouri, 1898 Ashland sub- in St. Rawlings sidiary Company, of Wilson and H. and Charles for W. Scudder Chicago purpose manufacturing packing firm. meat It under- the ing of and sell- emerg- changes, equipment sporting of went a number name and ing goods, primarily clothing, present in 1941 in its at wholesale form acquisition wholly-owned subsidiary, and retail. At the of a Wilson time its sales by Spalding Company. Sporting 1955 it was a Goods In the course in Missouri engaged corporation acquired in the manufacture of four decades at some Wilson general of a of athletic and sale least seven smaller firms and in 1955 operated principal manufacturing goods, plants with its main 13 in officeand Louis, place parts country. located at of business St. various of Wilson Rawlings Missouri, plants general goods, in had three sells a line of athletic Louis, Missouri, purchased in in one New- one St. manufactured it or either burg Licking. a in also had one from other manufacturers through resale Rawlings wholly-ownedsubsidiary, Sport- 29 in branches 28 states ing Company, recognized offices for a Goods sales number of has been years depots leading producer and wholesale distribution Louis, Chicago, in St. as the of athletic Angeles. industry. and Los in the leading general MacGregor, the other was sound financial con- competitor corporate dition December 1955. Total acquisition, of the 1955 had increased at the time was assets from 1953 22% 1955, partnership, approximately $6,500,000. to in 1875 in- to founded 1958, $11,209,825. corporated in 1922. In for 1955 Net sales were 98% outstanding MacGregor's worth had stock ac- Net increased same was 25% period approximately $4,288,000. quired to Brunswick-Balke-Collender Net
591 charged prices Mac- the basis Company. Between following to Gregor dealers in the classifications: acquired other small five at least recognized producers was 1955 it and in per “Over dozen $16.00 industry in third-largest as the per dozen $9.01 $16.00 point of sales. Up per dozen $9.00 Base- Molded or Rubber Covered Manufacturing The Athletic Goods balls.” Association categories according price ath- Information Prior manufacturers softballs, foot- goods organized such as association trade letic similarly gloves balls, boxing Manufac- was known as the Goods Athletic pur- turing compilation individual (AGMA). solicited. A Its Association showing production reports con- annual poses of its total II Article listed prepared by an account- by-laws item of each to be: stitution and “AGMA’s firm and was known “ * * * protection ad- 4a Surveys.” Reports” Census or “Census goods in- the athletic vancement of encourage- dustry, promotion and 1954, whom the In 74 of firms activities, ex- ment of athletic questionnaire responded. sent information, change de- credit participated. out firms systems, velopment adequate cost 1953-1958, During years or. one descrip- trade the standardization companies, Spalding, more four lines, simplification of tion and the MacGregor Rawlings, Wilson promotion and en- development, complement represented the officer prac- trade forcement code AGMA. tices.” At the time of about 25 Issues including princi- firms members raises two issues re- engaged industry. pal view: *7 engaged in From 1949 to 1954 AGMA (1) Whether there is evi- substantial gathering publishing and statistics of the support to the dence Commission’s find- industry’s production. At first this ings that relevant the of commerce lines obtaining industry to aid members in (a) industry the athletic and material in na- raw allocations times of higher- categories (b) low-priced and emergency. such commod- tional After particular product lines; within and plentiful the information ities became (2) valuable to members was deemed the of Whether substantial evi- practice support the the therefore to the dence Commission’s find- Beginning ques- ings Rawlings by continued. that the of prepared Spalding may substantially tionnaires were sent to all lessen com- prod- petition manufacturers monopoly. known of athletic or tend to a create requesting they report that ucts Categories specified some of items annual sales Price as Relevant Lines quantity and dollar both basis. of Commerce production figures requested inquiry outset, the we are At confronted with categories. specific price into considering down broken whether task the Com- the questionnaire example, properly the For determined the relevant mission production in lines of commerce case. information on called counting pre- reports firm. In 1955 data was were considered confiden- the 4a. The prepared pared firm but tabulated In the data was the tial. Accounting Report” Division the Federal Trade in the “AGMA Census tabulated independent Ernst, an & ac- Commission. Ernst right.” argued the “A. That’s It was before Report price that categories the AGMA Census reply Mr. Bowman testified designed by manu- were question on in which direct examination through themselves, the AGMA facturers significance he was asked “about the Report Committee, dif- to define Census * * * price categories, shown markets, fering characteristics, physical price Survey”, sched- AGMA that the products prices uses for all of end specifications ule was used designate instead of categories established. for which quality of raw materials prod- support position To product that went into the workmanship. as as well categories are price ucts in each of the sufficiently asked, was then “So He distinct different and your I understand answer category price within those categories price quality are related to the each product line to constitute the same He answered sold?” separate group products so classified right.” “That further Mr. Bowman proceeding, line of for this commerce Player testified as to American Wilson’s complaint called supporting counsel line: Herrmann, George Ex- witnesses, J. end. “That is what we call the low J. Secretary AGMA, Fred ecutive quality That that went in is not the Philip Bowman, President Wilson cheaper is, there. That Goldsmith, Board H. MacGregor. Chairman go materials less labor would and Gold- Bowman Messrs. type into than merchandise of AGMA smith been officers had go your grades.” would better Report Committee. members of its Census ’ Play- American He also characterized price Mr. Herrmann testified that the er line: categories inquiries into which the “ * * * questionnaire AGMA’s were divided were juvenile line of designed particularly “to find out the equipment sell- for Christmas sold types equip- market various footballs, including ing, lower ment, the volume that would be in various basketballs, pads, basket- shoulder price response In classifications.”5 sets, youth goals, ball boxing bat ball following questions, by sup- the porting counsel bags, gloves striking complaint, he testi- further mostly type equipment sold fied: toy departments.” “Q. designed Was also response questions to further Mr. separate any particular classes or replied: Bowman quality? as to “Q. *8 Bowman, respect Mr. Well, govern price “A. would to the items set forth in Amer- quality whether it was the Player better or catalog, ican Commission’s might whether it have 50-A, been you Exhibit do I understand toy classification, say or whether it would correctly repre- to these items high quality equipment. something toys be sent in the nature of ? “Q. you Well, exactly toy. Do mean that “A. it is a that toy goes younger classification would be the It children who priced equipment? you may enough, say, lower are not to old Reports product price 5. The AGMA Census divide the “baseballs” into three
groups and one additional class: per per $16.75 1. Over dozen Over $16.00 dozen per per 2. $9.01 $16.75 to dozen $9.01 $16.00 to dozen Up per Up per $9.00 3. to dozen $9.00 dozen 4. Molded or rubber-covered Molded or rubber-covered baseballs. reg- games a use sold for under dozen couldn’t participate $9.00 yarn-wound Nobody less be a ball. equipment. is more ular country could make one for less juvenile line. a than it to be a serv- have $9.00 “Q. juvenile and would It is a look at iceable ball. So when we leagues professional not be used figure there we that there that know colleges universities? particular year in that over were right.” 5,000 “A. That’s dozen that baseballs sold construction, yarn-wound not of a following gave testi- Mr. Goldsmith that were an inferior nature that categories: mony subject price on league games would not be used regular games. or in “Q. Now, Goldsmith, call I Mr. category your price attention to category “Then next was from re- on the M. A. census shown A. G. That took in all $9.01 $16.80. sig- you ports and ask to state the playable the use, balls that the kids would categories price on nificance amateurs, leagues, the small certain classifications. forth, bracket, up price and so to that experience and we did know from “A. a whole felt top that turn one could out the no necessary it it was break ball for than so less therefore $16.80 you quality’s down sake any- year particular in that $16.80 every cannot take item that made thing sold, some manufac- that was goods industry in the athletic might top ball at turers sell their category examine to find it out what $18.00, $16.80, at others at others Anything goes thing you it so that the best $19.00, others at $20.00. by price Probably can isdo route. knew official above top we was the give the best illustration I can .would gave manu- ball. So that of baseballs. categories facturers then three through price but the route of the “Q. page That is shown on quality.” indicates the of CX-70.6 qualifications attacks the example, For “A. we have base- testify Mr. Herrmann to the clas- price broken down balls into three ground sifications categories. up Baseballs $9.00 services to that his AGMA were clerical Category dozen is a dozen $9.00 testimony and administrative. His just picked out at random be- reports items covered cause it was known fact certain necessary, “toys” would be ball said to be entitled to little copy MacGregor’s 6. Commission’s Exhibit 1950 AGMA Census Re- port, witness, respect following shown to the sets forth data with to Mac- Gregor’s products: sales baseball Value Unit F.O.B. Plant *9 of Quantity (omit “Baseballs cents) Measure 5,199 Up 38,162. $9.00 Dozen 340,180. 23,699 $9.01 to 16.80 Dozen 43,714 1,162,184. $16.80 Over Dozen 72,612 1,540,526. Total Dozen Average Value XXXX XXXX $21.22 Molded or Rubber Covered 2,258 11,824. Baseballs Dozen Average Value XXXX $ XXXX 5.24 1,552,350. Total all Baseballs Dozen 74.870 Average Value XXXX XXXX 20.73” price weight product lines for AGMA which weight whatever and that or no categories destroyed by there his established might were given to it was be priced price separate items of low AGMA he knew which denial that toys.7 not sold in categories which is to embrace meant in line. alleges Herr- items same other that Mr. Further may toys priced properly aspect items testimony low These as to mann’s toys products any or as event be in classified was uncorroborated organized in ref- suitable for merely use his meant Mr. Herrmann games. Other items size “toys” of official items not erence to product line are weight. within the same higher quality, are more durable AGof Treasurer Mr. was Herrmann regular competi- designed for in use Executive became 1949 until he MA from professional ama- both tion among duties, Secretary his prod- players. teur teams handling the things, consisted other categories are of these ucts each object it was data statistical physically in the from those distinct and distribute. to collect of AGMA other; they quality different are true, regard, Mr. Herrmann purpose price, as well as capacity but administrative in an acted they used. made and for which are concerning testimony the mechanics his that these two can be doubt There no quite operations within of AGMA’s categories prod- various within the AG qualifications. testified He his distinguished com- can uct lines products categories certain defined MA petitively and that each other designate toys, he not able but separate distinct constitute operated point the classification at what mean- lines commerce within idea Herrmann’s manner. Mr. in this Section may “toys” been not have word descriptive lower precisely “Using example, baseballs as an goods. to be It is category testimony the uncontradicted de- testified Mr. Bowman noted that Goldsmith witness establishes that Player scribing “American Wilson’s are sufficient there differences be- line”, expensive a less selling, tween baseballs for under being Wilson, produced and sold selling a dozen and those $9.00 toy mostly to the “sold items that more than a dozen $9.00 to con- departments.” separate them stitute lines of com- On whole Mr. state- Herrmann’s yarn-wound; merce. One is general ments were consistent with the is not. other One suitable for use the AGMA intent of classifications as organized competitive play; expressed Goldsmith Messrs. and Bow- They is not. are of different together testimony man. Taken quality, prices, at sold different formed a three witnesses substantial findings and have different end-uses for the and dif- foundation of the Com- that: mission ferent markets. The market for the higher priced baseballs consists of think it clear from this “We testi- league mony major teams, and minor each the various semi- you 7. On I don’t know cross examination Mr. Herrmann tes- teII cations, because the classifi- price as follows: tified classifications * * * you toys. point “Q. Would out be considered as would * * * * * * price price “Q. classification or classifications Is you you say price you to which refer when classification whatever can *10 designed identify designed being toys were the ones that were those exclude toys? equipment? playing to exclude from other * * * No, identify No, I can’t I “A. I can’t them “A. do that. don’t know * ** over, can, I can look but The them can’t manufacturer I I can’t. I can’t.” teams, importance. col- of of little professional amateur The conclusion and high schools, separate leges others cate- all Commission as to gories organized higher-priced lower-priced who use baseballs games. priced are prov- baseballs its low was well within The by customers ince under for use the evidence before it. not suitable for up market make who recognition categories price In its considered be reason cannot as relevant commerce the Com- lines of higher priced competitive with the be mission with the Ex- differed Initial baseballs. recog- aminer. It held that he “failed to complaint supporting separate nize that “Counsel there are and distinct sep- are three markets for contends different lines within product lines commerce within each arate of these lines.” first or product The line. baseball It also found that the Examiner line, baseballs priced includes low “ * * * The selling dozen. $9.00 under compounded this error line, in- second, priced medium or by emphasizing the number of items to $16.80 in the $9.01 cludes baseballs produced rather than the value of base- category. line This consists comparing such items in the com- by juveniles in primarily used balls petive positions third, competition. organized Rawlings with other manufacturers line, base- high priced includes industry. result, As a his selling than $16.80 for more balls comparisons, many instances do primarily used This a dozen. competitive not reflect lationship true re- colleges, leagues, by professional existing among these top quality require a who others companies.” baseball. Hearing fol- Examiner devised the proposed also similar has “He lowing showing table the market shares products, such for other lines participated all manufacturers who boxing footballs, basketballs Survey the 1954-1955 AGMA Census agree gloves. rec- that the While we relating based on data to the number supports his contention ord produced: of baseballs separate mar- and distinct thex-e high low, medium and kets priced each several within items Lannom Spalding 19.2% 18.8% opinion lines, we are 15.3% 16.5%' pro- purposes of this for the that ceeding de Beer 17.9% 16.2% necessary to con- be it will Wilson 16.1%' 17.5% high- priced and the lower sider MacGregor 10.2%' 10.9% priced as indicated above.” lines er 10.5% 9.4% Tober exception 3.9% 4.8% takes Spalding further Hofran “toys” 3.8% 3.1% Commission to reference Sealand 1.7% commerce 1.4% definition of in its Harwood Kennedy priced 1.5% 1.2%' items”. The in “low than than Less Less saying: opinion 1% in its 1% term used the may priced properly items low “These this he concluded in 1955 From toys products not or as suita- classified surpassed with organized 15.3% ble for use the number of production of “toys” games.” The characterization 19.2%, de Beer with along Lannom disjunctive “products is in organized Wilson with fur- He com- for use in 17.5%. not suitable 17.9% production combined games.” that the found Whether or not the ther petitive actually “toys” quantitatively of items are lower *11 596 against would be but the next Spalding’s On this in 1955 value basis 24.7% largest producer, Lannom with surpassed share of the market was 19.2%. 21.8% only by 22.9%, Wilson with while de regarded The quanti- (leaders Beer and quanti- Lannom on analysis tative inadequate since, it basis) produced tative ignored stated, completely it 11.6% 10.7% the value of respectively. The combined share produced by the baseballs the same com- Rawlings gave posi-
panies first reported to AGMA. It for- tion of following mulated the 33.1%. table of market shares based on the value of all base- contrast between market shares produced: balls quantitative basis and those on a value basis was influenced fact 19 5A large portion produced of the baseballs Wilson 21.3% 22.9%- by Lannom and de Beer were in low- 22.7%- 21.8% priced category produced while those MacGregor 14.0% 13.8% by Rawlings over- de Beer 10.6%' 11.6% higher-priced whelmingly in the cate- 13.0% 11.3% following gory. table, derived Lannom 10.4%' 10.7% from AGMA for the Commission counsel Tober 2.6% 2.1% 1955,8 reveals, by quantity reports for Hofran 2.6% 2.2% production value, Harwood 1.6% 1.8% Sealand priced low % n 1.4 1.4% Kennedy reporting manufacturers. .1%' Higher-Priced Baseballs $16.00 $9.01 Over $16.00 Quantity Quantity (dozens) (dozens) Value Value 47,376 42,552 945,602 565,915 38,761 751,513 58,230 Wilson 780,812 MacGregor 25,707 529,558 29,224 388,322 17,148 313,993 39,865 479,969 6,963 112,801 de Beer 24,890 289,879 5,733 97,632 Lannom 18,888 211,755 2,850 53,400 Harwood 4,870 57,760 6,142 7,468 Sealand 85,625 2,272 Tober 2,569 30,768 Kennedy 1,133 Hofran 145,151 $2,814,046 228,601 Totals $2,891,446
8. Commission’s Exhibit 353G. *12 Baseballs
Low-Priced
Molded or rubber Up $9.00 covered baseballs Quantity Quantity (dozens) (dozens) Value Value 3,344 12,121 88,059 21,682 $ $ 23,424 166,075 Wilson MacGregor 13,023 94,083 2,414 14,765 Rawlings 7,641 47,066 67,075 410,824 24,735 54,136
de Beer 101,883 470,818 5,920 12,011 Lannom 5,540 Harwood 1,851 14,485 Sealand 30,279 158,116 Tober
Kennedy 21,087 162,754
Hofran ' 258,097 $1,455,066 57,500 $265,348 Totals foregoing figures disclosed The record contains similar statistical higher-priced product lines, viz., out of a base- total of data for other basket- (over dozen) 373,752 balls, per footballs, balls $9.01 and softballs. Hence the $5,705,492 value, correctly dozens the four Commission concluded: general companies, Spalding, Wil- significant “One of the most son, Rawlings MacGregor produced points in the entire record is that aggregate 298,863 $4,- in the dozens were en- 755,784 315,597 in value. dozens Out of gaged primarily production in the $1,720,914 low-priced in value of the and sale of athletic (up per dozen and to $9.00 higher higher priced, quality line. baseballs) molded or rubber-covered is, therefore, It quality within this Spalding, MacGregor Wilson, and Rawl- line of the various ings, together, produced 61,967 dozens appraisal lines that an petitive of the com- $430,730 value, the other while merger effect of the should companies produced 253,630 dozens and properly be made. The manufac- $1,289,684 including value, Lannom priced ture and sale of the low together 199,- de Beer produced who of athletic involves an en- $947,789 611 dozens of in value. tirely may different market and apparent completely disregarded making then that appraisal.” were substantial higher priced factors in the area baseball Spalding challenges the Commission’s respective production but their holding categories price are relevant figures sig- priced in the low area were commerce, contending lines of that the nificantly hand, On smaller. the other prod- relevant lines are individual in the low de Beer baseball areas lines, viz., baseballs, etc., softballs, uct production and Lannom were the leaders. may “fragmented and that these not be categories price represent The two areas myriad separate into a lines based on separately which were dominated dif- categories price reports.” of the AGMA production higher- leaders, ferent Urging categories price that AGMA priced by Wilson, Spalding, MacGregor relevant — lines commerce because Rawlings, priced by defining and the low meet do not the tests areas — de Beer and Lannom. of effective and *13 However, that be observed destroy it should commerce line of the use would varia- examples of prob- few analytical the citation of a for concept device as an hardly general pattern from Rawl- tions the ing competitive effects the argument persuasive that ings that acquisition, Spalding constitutes a submits interpreting correct, Hearing and the Commission erred Examiner was the defining reversing price the AGMA wrong, classifications the Commission finding higher categories priced lines lines product the undivided that rec- competition entire A commerce. review of areas of can be considered ord reveals that there was substantial lines of commerce. relevant and therefore support evidence the Commission’s AGMA contends finding priced higher priced low meaning categories price have no categories distinguished com- “can be aas terms construed petitively from each other and priced con- items” “market” for “low separate lines constitute and distinct sisting “toys” suita- products not is general, commerce.” the former organized competitive ble for use in organized competitive suitable for use in higher priced games for and a “market” play; Com- latter is not. As regu- designed use in are for items which noted, “[t]hey different mission are professional lar both quality, prices, and are sold at different argues players. It amateur teams and different have different end-uses “ throughout the priced items’ ‘low 10 Further, Spalding markets.” submits clearly product lines that are various by Spald- bulk that the ing of all items sold regular competition’ ‘designed for use Rawlings regardless price, is higher conversely priced while there are through distributed sporting goods the same channels— use are ‘not suitable for items which (except for some dealers ” games.’ organized competitive It calls golf equipment sells up nature: three instances of such through golf professionals) —and gloves (1) for use in Baseball available Thus, Spalding argues, ultimate customers. same regular League competition at Little that a dozen, per within the lowest line such as baseballs available $36.00 buyers gloves; gradually category as- for baseball “in a AGMA continuum of cending prices qualities can- which (2) foot- “Junior Size” leather gross- any point not be broken at without dozen, per within balls at $70.20 ly distorting relation- higher category priced AGMA’s ships between baseballs above and bas- selling (“leather and rubber-covered breaking point.” dozen”) ketballs below the per more than for $45.00 playable, competi- are claims that close not relationship differ- tive between items of regulation” (3) “Smaller than offering prices is seen rubber-covered basketballs at $50.40 in the same them side side store dozen, per within AGMA’s buyers prospective the same that the category (more priced than $48.00 dozen) particular always playable. promotion per item is likewise not Although competition. 9. Mention is made of “BJB” refers also selling junior weight per $36.00 items as size at to these basketballs clearly dozen, price per “a within the lowest dozen and Wilson’s smaller $56.40 category”, gloves, regulation AGMA baseball than size “Junior Official League” per dozen, be observed that the lowest $14.50 baseballs at is to AGMA category precisely per unplayable products high- or less “$36.00 but in both categories. size The Junior leather dozen.” footballs er regulation than rubber and smaller cov- marginal Spalding’s higher prices ap. nature of ex- at are ered basketballs ceptions exceptions gen parently is illustrated gloves its reference to isolated League pattern. baseball for use Little eral changes general designed sales ef- reflection those to further the category price product line. limited to one AGMA items fort all within pro- and that all of considerations these price in- However, mere more than fragmentation hibit of the relevant categories. The volved in the AGMA price dis- market on the basis of mere they represent mean- record reveals that ingful quality example, submits, tinctions. an items between differences ability higher quali- produce *14 They product ad- in are the same line. ty (i. yarn wound) e., low- at a baseballs justed preserve to from time time to permits er sold cost to be those baseballs integrity. Regardless nature prices formerly applicable at to pricing promotional tech- quality price lower baseballs and that engaged a niques Spalding in in which requires quality reduction that lower given product line, never- items therein in price baseballs be raised reduced in of use denoted theless still fell areas into they quality competitive, if are to remain by categories. in price Those AGMA creating phenomenom, “price a known higher priced de- were classification sensitivity elasticity of de- cross games signed organized competitive for prohibits mand” a characteristic which com- same line of and were not in the fragmentation market on of the relevant priced items. merce as low price the basis of mere distinctions.11 argues product Spalding also that each Spalding’s illustrations advances unity competitive no line meaning a which has by “yarn-wound 1955 made in baseballs of its in terms of one regulation weight under size and for fragments. price It that cate- asserts a dozen” are: $9 change gories subject themselves are to (1) Rawlings’ “MM1” which it states ignored the and that the Commission regulation to be “of ‘full size’ and generally accepted concept that economic ‘yarn per dozen,” wound core’ for $8 a manufacturer inhibited from rais- “is “ (2) Spalding’s ‘yarn ‘Official’, higher priced price item of a (Nos. 176) wound’ baseballs 175 for * ** price rise a will cause because ” * * * up to a dozen. $9 buyers many to a article shift that catalogue * * Rawlings’ shows MM1 priced lower item It contends regu- ball, baseball to be “A durable full change price “reper- decisions have * * * gum yarn lation size wound price across the various cussions AGMA signifi- core of resilient materials.” The categories given product line”, that for a gum unexplained. cance wound is regula- yarn wound gum Rawlings’ only other wound baseball weight produced to size and tion catalogued n sellfor under juvenile R8 “a semi-hard per that a dozen and $9.00 selling ball” a dozen. at $2.85 grade top baseball could be offered for compared per dozen as $16.00 $16.80 catalogued Spalding’s No. 176 is in 1950 and in 1951. al- $16.75 “yarn per wound” and its at dozen $9.00 similarly “yarn so inevitable tech- asserts that it is when No. 175 is at wound” nological improvements noteworthy per and other fac- But dozen. it is $7.20 changes costs, in both of result these balls are rubber- tors suggests one, justification, not, if connection whieh what 1 n —from standpoint price categories, shifts AGMA that themselves, con- place' cannot define ditions shifting market there for lines of com —is Using footballs, example, them from as an one line another merce. year year. Again highest from 1954 the AGMA has it states category single price an instance of a rubber cited isolated item footballs was years up” overlapping change two without “$45.01 and in 1955 $42.01 presents inconsistency up.” price. an which of It but into Com asks proportion its not of clouds mission’s so-called linos commerce justification of the Commission in de- both in 1954 1955 at footballs fell; was in this case termination whether fell into $43.20 encompassing higher line of commerce line in 1954 and 1955 and so :same if apparent- Co., F.Supp. covered. v. All of these balls are Brown Shoe
ly distinguishable (E.D.Mo.1959);12 in the cate- those United v. States gory used Corp., F.Supp. found Commission to be Columbia Pictures organized (S.D.N.Y.1960). competitive play. question must the basic all times At Sugar cites re- case aas e., sight, kept the correctness i. jection price “the required contention that dif- the Commission determination finding ferentials separate categories rele- price define the AGMA lines of commerce.” There the court prod- within of commerce vant lines sugar sugar held that beet and cane give arguments Spalding’s uct emphasis lines. single although line of cane commerce marginal instances a few sold per at 20 cents more beet cwt. than so close price in which classifications although preferred certain users interchangeabili- may be some that there ty case, however, clearly cane. That dis- *15 sensitivity for items price between and tinguishable hand, from the one at for games organized competitive and use in price the court found that the dif- price Neither are not. those that ference between beet and cane was for by Spalding, change decisions, cited part the most historical rather re- than technological improve- whether due to flective of the actual in char- differences nor occasional otherwise ments or overriding acteristics and it relied on the prices items of between closeness consideration that there was “substan- product measure in such lines are shown tially complete interchange- functional substantiality of as to dilute the ability” sugar. between beet and cane upon evidence before That higher-priced cannot be said of based determination. which it its organized baseballs suitable for use in conclusion, derived reasonableness competitive play lower-priced and ones categories price ef- therefrom that unacceptable for such use. fectively playable and non- differentiate Mo- cites the duPont-General playable items, held to withstand must be demonstrating proper “the tors case as Spalding’s respect. attack in this handling price differences in determin- mar- that since also contends ing commerce,” relevant lines of in that keting trademarks, data, such as trade proliferate automotive it “refused to names, patents and endorsements ath- and finishes into multitude fabrics letes, appear products price in all upon quality of commerce based lines they ranges, have no understandable price types in various distinctions meaning regard ” one AGMA * * * finishes such fabrics category price viewed in but must be However, Supreme Court in that case product the context of each aas the market for automotive found that argument whole. This also fails mar- rather than the finishes fabrics derogate from the effect of the AGMA generally for finishes and fabrics ket higher categories denoting price prod- was the relevant of commerce. organized games ucts used in that, finding on the based its conclusion defining a line commerce. fabrics have automotive finishes and suf- challenging peculiar the Commission’s find- and uses ficient characteristics categories price products are relevant constitute them distinct from commerce, Spalding lines all cites four other finishes and fabrics there- Crystal Sugar separate cases: American v.Co. fore a line of commerce within Sugar Co., meaning Cuban-American 259 F.2d Section 7 of the Act. The 1958); (2 price Cir. United v. E. was irrelevant in States factor the de- Co., finding I. DuPont De & Nemours The Commission’s U.S. termination. 872, (1957) priced products S.Ct. L.Ed.2d 1057 in this case that (duPont-General Motors); product United States within lines are market areas Appeal Supreme 6, 1961, argued to United States Court December see L.W. 3180. quality-derived price dis- in the reference priced items low from distinct de- with tinctions.” In that case court in conflict not product line is same e., “feature films”-—-i. clined find that decision. Motors duPont-General originally produced for the- differ those films Higher priced athletic distinct, viewing for tele- they atre later released are in that the lower from showing a line of in vision price and quality, in physically, in —constituted product distinct commerce or market made purpose are for program- types television not Higher priced sold. interchangeable ming syndicated including films material low those television, produced specifically live pe- category; its own .priced has each programming taped shows, video car- uses. culiar characteristics toons and shorts. The court held: repudi- cited Brown Shoe “To determine whether or category ating argument price “the probability there is a reasonable by the of commerce here advanced lines lessening competi- a substantial case, the court In that Commission.” tion, Clayton Section 7 of the Act de- shoes, shoes, women’s held that men’s mands an examination into economic lines of com- children’s shoes constituted merce, competition realities. All considered, must be argument rejected including grades, prices qualities, “differences question faced *16 should be considered and uses shoes products.” F.Supp. from other determining com- in relevant ‘line of p. 183. at significant “degree merce’.” It found interchangeability” the shoe in- in It concluded: dustry. example, For found the court sum, “In the evidence establishes interchangeability in shoe manufac- high degree films that feature face a turing style process, price, quality in and competition from other forms of shoes, in use to which are shoes material; programming television by finally put customers “the and that they peculiar do not char- have people shoe their themselves admit that signif- acteristics or uses that are * * * * * trade classifications purposes; for television they * * icant * characterizations differen- reasonably * * * are inter- buying eye, tiate to catch the changeable with, compete do not determine the use to which the against, types of all other television put [is], put.” shoe is or whom it programming material. The Court’s goods industry, how- In the athletic is line of is there no conclusion ever, found no the Commission such product commerce or market limited interchangeability priced between low F.Supp. feature films alone.” categories. higher priced It found pp. 191-192. at price that the AGMA delineations mark distinguishable This case for here non-interchangeable between divisions the, Commission examined economic constituting products distinct areas of goods industry realities of the athletic competition. pattern The fact effective that the evidence found established surrounding higher priced and lower product readily “in each of the various lines in dis- men’s shoes Brown Shoe is categories tinguishable price AGMA from that around the which categories priced and separate low ath- there line of low established goods in case. letic compe- priced items sold in prod- items in other same tition Finally Spalding cites Columbia Pic- found that the line.” uct “manufac- asserting tures the court price the low line of ath- and sale ture fragment “would not the relevant lines entirely products involves an (television letic dif- programming) of commerce production “the separate market” into so-called lines ferent of commerce higher priced, ef- determinations as to the area of sale “prod- higher quality line,” fective should have been and that the categories are facts made of all record on basis ucts in each of these delineating physically in oth- relevant market from those distinct ” * * * er; they quality and in markets. are different price, purpose for which as well as faithfully The Commission in this case they used;” that “these are made and followed this earlier observation. categories within the various two deter- arrived at its distinguished competitively lines can be higher priced the AGMA mination that from each other.” (and products) constitut- something" Direction for the determination of the ed lines based on of commerce given by the Com- relevant market was that both mere consideration more than a Manufacturing mission, itself, the- Brillo manufactured Co., (1958), Rather, Trade products. FTC Dkt. 6557 CCH the Commission- same 27,243, testimony Reg.Rep., Par. as follows: wit- was influenced “* * * categories price de- nesses that those hearing We think the concluding products peculiar charac- lineated mat- examiner as a duPont- and uses as described in teristics industrial steel wool ter law that peculiar Those char- General Motors. market in bas- was the relevant ing erred found to be and uses were acteristics solely his determinations superior labor raw materials and being fact that those were the wares products con- with which those acquired produced and ac- distinguished low structed as priced from the companies. quiring The test in- ones; particular suitabili- whether stead is these organized ty for use in pe- the facts have such shown games were not inter- culiar characteristics and uses as *17 changeable with lower items for sufficiently them constitute distinct purchasers purposes the the of their from others to make them ‘line of a that, market. The Commission found meaning within the commerce’ the higher priced products constituted- these Act. United States v. E. I. duPont competition. a distinct area of effective & Co. [1957 de Nemours Trade Cas- 68,723], 353 586 es Par. U.S. [77 Segments product lines have been 872, (1957). L.Ed.2d S.Ct. 1 1057] lines- be relevant market areas or held to acquired acquiring That the cor- in a number of cases. of commerce porations both made industrial steel Reynolds Co., FTC Dkt. In Metals only one circumstance to wool.was 28,533 Reg.Rep. par. 7009, CCH Trade considered. Additional
be factors (1959) Commission held that “dec- the have been which could taken into foil for florists” is a aluminum orative relating account include data from separate of commerce “alumi- products in which manner marketed, the different, generally” because of num foil physical characteris- use, physical characteristics market- things tics, prices, possibly other characteristics, price behavior and ' bearing question on of whether factors. they may distinguished not competitively v. Bethlehem United Steel other wares. States On In (S.D.N.Y.1958) hand, F.Supp. Corp., 576 168 as the the other examiner in held, “pipe” to find that refused the mere fact court essence that arti- commerce, but found a line of other than steel wool are cles mar- constituted pipe pipe, electric-weld for industrial keted use as buttweld abrasives legal adequate pipe were distinct each lines warrant seamless including peculiar commerce, basis of the all on the abrasive standards. relevant line and uses of commerce. The characteristics
603
recognized
Corp.
Federal
In
Zellerbach
v.
a
own
Crown
with its
market
6180,
Commission,
competitive
Trade
Dkt.
FTC
United
standards.
See
(1957),
Corpora-
FTC
296 F.2d
affirmed
States v. Bethlehem Steel
(9
1961),
papers
[D.C.],
(1958).
F.Supp.
Cir.
tion
coarse
census
industry
goods
held to
distin
be lines
commerce as
Moreover
the athletic
guished
recognized
papers.
from other census
members and
separate
its trade
a
association as
Boxing
New
International
Club
”*
* *
industry.
and distinct
249,
242,
States,
York v. United
358 U.S.
(1959),
S.Ct.
position
billiard and leys and al- shin equipment. protectors pads, and Also included in chest and similar shoulder primarily this are establishments items.” engaged manufacturing in and athletic court in hiere, on Section 7 of the produce merger.” products try, merce for but the facts general, it is an Bethlehem Steel of the and analyzing appropriate line of F.Supp. iron and sell in Clayton declaration the effect every has at steel Act p. principal application case 594. indus- may com- this based be Boston, Washington, D. N. nois; Florida; distribution officesin [*] ington; Subsequent [*] Y.; Philadelphia, *» and Los Massachusetts; Dallas, to 1952 Angeles, Atlanta, C.; Texas; Spalding has Seattle, Wash- Pennsylvania; Chicago, New California. Georgia. Miami, York, Illi- had expected in Brown Shoe: products ance with its own properly its determination of the market within which to measure the pact Manufacturing or relevant effects relevant among other goods industry lines of on more than a impact ered for facts tion. This area must be determined each mathematical area or areas of effective sarily by political through located pots Before throughout Prior has made of meaning of “Thus, acquiring “Spalding of the Relevant economic F.Supp. considered Hearing case must stand Court to the conclusion Here the commerce as to the determination of geographical entire United turning determined that “section wholesale a review of and do merger. Chicopee, purpose of things: at distributes its sales being reality Section merger the United Examiner Company, precision. Geographic Area geographical dimension Commission, in accord a determination finding only p. such facilities additional admonition boundaries with differ. As acquired 733. whole distributing produced area offices and not neces- Massachusetts; the cases on determining relevant upon States, problem of the country”, with held that the to be consid- is a relevant supra, the relevant * factors competition competi- companies. its own located in Brillo States. ** stating, leads market should made de- both said ” im as the Examiner’s stating: ucts fices to the date Spalding. tional veloped as follows: Chicago, foreign its distribution a statement of its that both appropriate out the United States The Commission distributed chasers throughout peted over, competing manufacturers sellers adoption tion. firms do which the der try’ assume that equally does not contended tential, C. [*] “ ‘Rawlings “Rawlings “ * * * all sections every Section may nationally in Los appropriate sales Pillsbury of athletic strong markets. of such [*] (1953). outlets for section of the business of the United States include Illinois. adoption by respondent, every It maintained implicitly well as Spalding and the United States. acquired and Angeles, force and 7, of its Rawlings directly these distributed geographical market [*] factors now system is revealed ‘section products Mills, approved the sale geographical products As stated President record * many years The maintains actual, two firms were [*] country. More California, acquisition the United market area in ** its brands may country. Un assume Inc., has of the coun strength are located branch establishes nor does [*] acquiring cover made, through competi also de- 50 F.T. located as the Hearing prod- market, prior 1952, com pur States [*] na- po of- by *21 contemplated by Bethlehem Court in v. United States Section was in supra: Corporation, case the proper. Steel entire United States was “ ‘ * * * intended is section 7 Spalding’s That Concen- Contentions competing buyers protect as well Declining Is Low tration Therefore, section sellers. re- country must be determined support im- position that buyers spect and sellers. to both pact merger of this to disclose fails must made determination probability lessening only com- where the basis of not tending any monopoly line of sales, panies past made in the have contrary commerce asserts that po- where but also on the basis of finding to the of the Commission tentially they sales could make industry sporting goods and athletic reasonably buyers turn could where highly exhibiting concentrated or substantial to them as alternative tendency any- concentration, it, if toward ” supply/ sources of thing, shows a deconcen- trend toward .tration. holding Commission This Spalding charges any conclusions by Spalding contends questioned may the Commission have reached on the regional mar indicates that the evidence levels of concentration in the one. nationwide kets rather than a upon are erroneous based “the unre- record in the Spalding refers to statistics quality data”, quantitative liable Rawlings’ prod arguing that 80% figures derived in the AGMA re- Mid sold in Southern ucts were ports. They are, Spalding, asserts defec- Raw- accessible states most western tive, only in that one since have only lings’ plants Missouri participating companies numbered as sea 13 eastern sold in the 1.6% many although approx- as 80 there are finding in is the board states. Cited imately manufacturing companies Crystal v. Cuban-Ameri American Co. products reports covered the AGMA Sugar supra, Co., a 10 state where can reporting sample only chang- and the not relevant area was found to be year year es from but increased from area, despite fact that both market reporting companies to 75 companies acquiring acquired and in 1955 while the total number of man- competitors sold substantial increased from ufacturers 184 to 197. sugar outside that area. amounts However, complete It cited the omission from AG geographic market there Royal MA Manufacturing records states —the so-called as 10 was defined Company, a firm from which Territory in middle west— River purchases gloves made prior and mitts specially active com because and which is not even merging proposed petition between listed as a manufacturer to which AGMA competitors companies and their in a questionnaires were sent. subject to the common market that designated terri forces economic complains reports It also AGMA any tory. No such characteristics define par- overstated the market ticipating shares all geographic division of United States they because fail goods. As the for athletic to reflect that substantial volume of imported the record establishes into found that both the Unit- year. each ed States Spalding and distributed their throughout products the United States Spalding suggests In addition that ihe purchasers such figures reports in the AGMA dollar competitors and Rawl meaningless” “nearly because do throughout ings country. are located given represent prod- actual sales in finding ap Commission’s line, but uct are fictitious values arrived propriate country”, by multiplying participating “section of the at manu- *22 selling price possibility theoretical that a manufactur- facturer’s low list produced As er at ad- number of sold. lower cost could reason its units vantage top quality practice an sell more baseballs illustration it cites its own cheaper which, Spalding, reporting than on the ba- under instruc- baseballs price, place reported tions sis its unit would It that AGMA. it, Spalding, professional com- had sold in in a rank above the 1955 to baseball leagues 20,170 peting manufacturer in terms of dollar at its sell- dozens low list reported price per $435,672, values dozen or AGMA. $21.60 only $137,798, when in fact it received challenges Spalding the Com- further inflating thereby for the baseballs high as to concen- conclusion mission’s percentage market share more than 3 baseballs, manufacture of tration in the points percent. over 17 contrary, claiming, that it is low. on the urges following Spalding presented man- that table of Moreover AGMA It misleading figures of the volume base- dollar because ufacturers’ shares production:14 they do not take into consideration the ball Share Share Units Units Reported Reported AGMA AGMA b Manufacturer
Lannom 18.8%' 19.2% Spalding 16.5% 15.3%' Beer de 16.2% 17.9% Wilson 16.1%- 17.5% MacGregor 10.9% 10.2%' 10.5% 9.4% Tober 3.9% 4.8% Hofran 3.1%- 3.8% Sealand 1.7% 1.4% Harwood 1.5%' 1.2% Kennedy than .1 Less than Less .1% %' figures charges only Spalding Spalding, these behind which 3Ao 1% finding occupied disprove place. of the Commission In 1955 second Lannom Rawlings, largest Spalding, and de Wilson Beer sellers producers MacGregor dominate while was fourth argues product It states line of baseball. sixth. years preeminence prior of Lannom and the two de Beer at least 13 manufacturers there were underscores the error of the selling finding producing Spalding, base Commission’s Rawlings. including Rawlings, MacGregor balls, Spalding and Wilson and dom According report 11 com to the AGMA inate the manufacture and sale of all 603,928 product produced valued panies dozens lines. states that those com 689,349 panies largest $7,003,330 1954 and dozens are not the four at in terms quantity $7,425,906 in 1955. Of these in at line and valued single company, Lannom, largest in baseballs are in terms largest producer with seller and AGMA dollar values was the which it charac single Beer, meaningless. company, de terizes another claims $175,000 Dudley 14. In addition to above as- with annual sales of Sports Co., $332,295. two there are at least with sales serts Xoung Co., producers George & baseball — *23 always manufacturer, began single company production does that a relatively largest in the var baseballs in small of business volume capital product had sales lines.15 investment and ious although $332,295, amounted its assets questions the Com- further $76,000 only employed to but five and it “high degree use of the terms mission’s Co., George Young workers and & “oligopolistic” of concentration” top quality manufacturer portion in with relation to market $175,000 employees sold five Spalding, Rawlings, baseballs of Wilson space. and limited floor Several ex- MacGregor where the annual value amples by Spalding cited production only $7,500,- amounted to baseballs, production lines other than separate 000 shared at least 13 manu- allegedly where firms sold a substantial Spalding emphasized facturers. that of goods sporting volume of companies participating in AGMA capital modest investments and labor produced each of six more than but 9% forces.16 reported production than less 20% (See speaks large both 1954 page 38) and 1955. table also of two in- companies, Voit Rubber dustrial Spalding contends that the record not Rubber, presently Tire & en- General only compels the inference that the con- gaged softballs, manufacture of centration in the manufacture and sale baseball, closely potential into entrants sporting already and athletic product line. related low but that it is also demonstrable that declining. the levels concentration are asserts that there no evi- Dudley concerning Sports Co., mortality It states dence new rate presents following percentage 15. It table of of AGMA totals in 1954 and single of some in various lines: companies, 16. lists the and annual sales as follows: Hogan $1,750,000 Ben Go. Golf clubs Regents Sporting 1,500,000 Co. Tennis and badminton equipment 500,000 L. Kenneth Smith Golf clubs Equipment equipment 50,000 Elco Football Football company alleged manufacturing Each to have modest facilities few em- ployees. lings among $121,239 in showed a baseball manufacturers and that decline manufacturers, except for three bat small any spe- point
the Commission cannot sporting cific ath- manufacturer of Concentration Conclusions *24 goods letic failed, which in contrast has of discussing contentions other Before the statement Commission’s low that concentration opinion that orderli- of declining, interest it is the “ * * * charges the investigate industry’s its the mortali- ness ty highest high reports rate is are unreliable. AGMA the [and] mortality reliability derived among of data has been small- criticizes the the single ob- reports, er be but firms.” from is supplied AGMA by that such data served argument final As a that concentra- industry use for the members of sporting tion in is low athletic upon AGMA’s relied them. and that declining Spalding that the submits substantially figures may reconciled be Spalding, shares combined market of Census States United with those of the Rawlings, MacGregor gen- Wilson and Reports as manifest of Manufactures erally declined from to 1955 ev- figures analysis base- for from an ery product by them, line manufactured figures year AGMA 1954.17 balls for the namely, footballs, baseballs, softballs, vol- similarly substantial represented a also ley balls and soccer balls and that n quantities in the listed percentage of individual shares of and Rawl- of Manufactures Census United States ings except decreased in soccer balls. In products.18 It is true for other this connection draws attention firms industry growth number the total of according to the overall about 40% reports reported industry upon $132,379,773 AGMA are in the athletic $148,521,348 1955, statistics, partici- 1954 to an but that increase in the AGMA percent largest segment of 12.2 and that none of the pating four included general producers important achieved the and accounted same most Spald- rate of increase. shows that the total volume of for 90% ing’s production actually goods produced overall for declined percent years from 1954 to 1955 and that 1954 and as found production Hearing Examiner, finding combined with that of Raw- presented following comparison 17. for the Counsel Commission AGMA year
figures for baseballs for 1954: Baseballs AGMA Census Manufactures 574,000 604,000 Industry (dozens) totals Spalding, market share 17.8% 16.5% Rawlings, market share 10.5% n 11.2% Wilson, market share 19.0% 16.1% MacGregor, market share 11.4% 10.9% Following percentages the AGMA the United States Census of for 1954 than Manufactures for baseballs as submitted coun- sel the Commission: U. S.
Products Census of Manufactures Golf balls 96.2 (irons) Golf 90.6 clubs (woods) Golf clubs 90.3 balls 94.5 Tennis 73.8 Footballs 94.1 Basketballs importations approved by is un- in relation to .the subject amounts thereof. matter contradicted.19 figures Why production Nor can the data value of the AGMA gloves Royal Manufacturing Company in destroyed by charge Spalding’s be included mitts for 1955 were its market value its re- was inflated unexplained but reports AGMA port receipts pro- sold production one omission of the great- leagues fessional baseball in much single product cannot manufacturer of a er actually amount than it received there- said to condemn the value for, Spalding reported because in 1955 appear to AGMA data which otherwise leagues sales professional of baseballs to *25 reasonably comprehensive.20 selling at price its low list when it actu- ally importing or received far Evidence of of less for this the effect merchan- urged given Spald- dise. If by effect rather the lack to the actual thereof price challenge regard, sales Spalding’s per- to this of the AGMA the value centage of data is the baseball likewise The evi- market inconclusive. revolving in terms imports peripheral, dence of dollar value would be 18.6% meetings 21.8%, instead of around the or a 3.2 minutes difference of percentage points. April 21, 1954, April 19, Although, Spald- AGMA on ing points out, 12, 1955, and October Mr. Fred amounts to a in- when 17% Bowman, flation of share, its market as Chairman Fed- it still of AGMA’s does Agencies eral affect rank as on an its second Committee comments Wil- (See page 16, son. import supra) table increase in “the items as such golf equipment, equipment, tennis base- by As contended the Commission’s European from balls and other items fail counsel AGMA’s records to disclose Japan” countries and and of his endeav- any manufacturers at low cost listed to brief the United Tariff Com- ors States higher produced priced subject. mission A record of the quantities approaching those op- and business information on financial Spalding. effectively produced by This goods par- sporting firms not erations of argument disposes Spalding’s that as ticipating cen- in 1954 1955 AGMA and higher priced producer cost goods sporting ob- sus of athletic and misleading might be inference drawn tained from Dun and Bradstreet dis- as to market AGMA’s data its share importing companies closed two —Amer- hypotheti- in dollar value in the event a Company Import and ican General cal manufacturer at costs lower under- Sportscraft Company, former Ltd. The Spalding. sold reported imported sporting to have goods general novelties, considering addition Spalding’s position In with display items, basketware, regard floor cover- concentration, tois be noted toys. ings, special- chairs and latter properly that the Commission has found accessories, ping pong ized in goods badminton high- the athletic and the sets, hockey, equipment field categories tennis er within lines dart boards. Neither instance reflects commerce, to be relevant lines of where- degree any clarity character steadfastly holds to the ar- (Collette 19. a letter of October 1955 from Manufacturing firms Co. AGMA United States Tariff Com- Barr Rubber Co. as to footballs Sporting it is stated that Company mission member firms Everlast Goods as to produce of the volume of athletic boxing gloves) unreported 90% are in 1954 but sporting goods equipment manufac- included in are substantial volume in (Commis- United tured States. companies produced 1955. That these 167) Exhibit sion’s assumption at all in 1954 is left reliability comparisons event alleged AGMA is also 20. be- bearing upon years may data as the issues of this tween not boxing substantially reliably case is not affected be made footballs and production gloves because the three omission. product, introduced for the Commission respective counsel gument only the pro- goods compilation of 75 of the 1955 sales con- sporting athletic lines of goods, reported to ducers of athletic of commerce.21 lines relevant stitute 359) ignore (Commission’s arguments Exhibit fac- AGMA Thus, Spalding’s amounting degree revealing concentra- total shows sales tors of com- present percent- in relevant lines $148,521,348 tion the individual of concentration the increase merce and therein, precipitated ages company. Nine- realized each acquisition. an excess of teen 1% listed, with their sales sales question of con- the total In connection with percentages, as follows:22 industry, centration Percentage
(Millions Dollars) Sales Companies 18.0 $26.7 1. Wilson (cid:127) 12.5 18.6 2. MacGregor 14.8 9.9 *26 Rawlings 9.0 6.0 4. 4.6 6.8 5. Voit 5.4 3.7 6. Acushnet Bradsby 3.5 5.2 & 7. Hillerich 3.3 Hyde 4.9 8. Athletic Shoe 4.8 3.2 9. U. S. Rubber 3.7 2.5 10. Sealand 3.5 2.4 Dunlop 11. 2.7 1.8 12. Tire General 1.8 2.6 Athletic Shoe 13. Boston 2.3 1.6 14. Dubow . 1.4 2.2 15. Hutchinson (cid:127) (cid:127) 2.0 1.4 16. Atlantic Products . 1.3 1.9 ohnson 17. Endicott-J Worthington 1.1 1.7 Ball 18. 1.1 1.6 19. Seamless companies four, after instead four three As found the Commission MacGregor Spalding, general sold companies, Spalding, Rawl- Wilson and MacGregor, of the total sales volume ings, dollars accounted Wilson 46.4% industry. shares of Voit 15 of the The next of the total and the for 46.4% leaving Company Process 34.7%, Rubber Acushnet accounted (4.6%) Co., respectively fifth Sales are remaining producers to all the 18.9%. remaining pro- (3.7%), and sixth and the brought together Spalding merger gradually. drop shares ducers’ Rawlings with with 6.0% 12.5% industry repre- brought of the value dollar focus to bear on the When giving reports higher higher priced, quality AGMA baseballs sented dozen) edge (selling per for over for the There- $9.00 over Wilson. only true, by Spalding 22. It is as contended insistence represent figures pro- product these those' are the relevant lines of lines reported AGMA and not ducers who likewise invalidates therefore commerce industry. analyses However, as here- entire detailed representa- stated, figures product made tofore in the 19 lines situations industry by Spalding the entire since for the Commission and sub- tive ' ; production. comprise Appendix. of the total in the Joint 90% mitted Rawlings year where in this 1955 the concentration higher quality higher patent. priced market in of commerce is The Commission baseballs is concerned. found: finding selling Spalding’s challenge “In 1955 baseballs high con- comprised the Commission more than that there dozen $9.00 of base- percent production 76.8 centration value the total sales balls produced. of all must fail. Four firms, MacGregor Spalding, Wilson, merger addition a result of As per for 83.4 accounted higher leading production industry cent of the in this total baseballs, Spalding higher quality priced largest pro line. Wilson was the gained production place in the first ducer with a market of 26.9 share basketballs, footballs per cent. was second with softballs, as found per MacGregor cent, 26.5 third Reports Census the AGMA per 16.1 cent opinion, as follows: high per fourth with 13.9 cent. The degree already sales concentration ex In 1955 “Basketballs: isting higher priced basketballs value market was selling (leather rubber covered merger. further increased dozen) was per for more than $48.00 Spalding’s market share increased $3,800,000 about approximately per 40.4 cent of the total per value total sales cent major competi one of its three produced. basketballs all tors was eliminated.” *27 firms, Voit, Spalding, year, Wil- five Rawlings MacGregor ac- son, Lannom and de Beer were leaders inexpensive per total the field of baseballs but 83 counted for cent higher priced line. As were not in the area of same sales of this Attorneys dealing presented following 23. for table
higher priced baseballs. 1 higher-priced
“Market shares in baseballs (In percent) Harwood Wilson Lannom J. Tober Kennedy MacGregor Rawlings Sealand Spalding Big deBeer Pour Company combined 2 Rawlings 1954 26.4 16.2 15.7 24.4 82.7 42.1 7.5 2.2 1.5 5.4 .6 .1 Dollar Value 1955 26.5 40.4 16.1 26.9 83.4 13.9 7.1 1.6 5.4 1.9 [3] .6 1954 23.7 40.4 79.0 15.4 23.2 16.7 2.4 2.1 Quantity (dozen) 9.0 6.6 .8 .1 1955 39.3 24.0 80.0 26.0 14.7 15.3 8.5 2.1 2.1 6.6 [3] .7 1 covered, range priced baseballs, highest $16.00 over Price for leather was priced 1955, price range price for AGMA for 1954 Medium $16.75. was range price range $16.00, 1954 $9.01 for leather was AGMA for covered was $9.01 $16.75. 2 Spalding, Wilson, MacGregor. Rawlings, Includes 3 percent. Less than one-tenth of 1 Z-36, Sources: OX 278-A Z-7. CX 353-A to figure.” Rankings companies are dollar value based on 1955
Note. — per 24.9 over Spald- lead cent acquisition, from a result industry total. per ing’s share, bn a cent of computed market per basis, 19.8 increased value sales val- In 1955 the “Softballs: making Spald- cent, per cent to 31.2 (leath- higher priced softballs ue of this line. selling leader er rubber covered dozen) ap- per was more proximately $9.00 than val- the sales “Footballs: In 1955 per- $3,000,000 or higher (leath- priced footballs ue value of all selling the total sales cent of er and rubber covered produced. ap- dozen) per softballs more than $45.00 largest producer in this proximately the fifth $1,600,000 about Rawlings per was the seventh line largest. cent of the total value sales including firms, year produced. Seven footballs In that all Rawlings, MacGregor Spalding, Wilson Wilson, Spalding, Voit, MacGregor, for about accounted mar- had a combined industry pro- per per the total ket share of in this line. cent of 86.4 cent merger, largest pro- a result of duction. As had been leading produc- ducer, sales, basis of dollar became the merger line, prior ac- er in this per quisition of cent.” of 20 increased its market share Following presented by attorneys reveal- for the Commission tables ing the market shares in the lines commerce: above relevant higher-priced shares in “Market basketballs *28 a range highest priced Price for for 1954 and 1955: Leather molded basketballs —Up $145.00; priced $145.00. Over Medium basketballs leather include sewed range and rubber. Price for $48.01 rubber was and over for $40.01 for over b Spalding, MacGregor, Rawlings, Wilson, Includes c Pennsylvania Company, Includes Rubber a Less than one-tenth of 1%. e acquired company, Company. Ohio-Kentueky Mfg. Includes Rankings companies figure.
Note: for are based 1955 dollar value Z-36, CX Sources: CX 278-A to 353-A to Z-7.” a higher-priced footballs “Market shares in the range highest priced and over— $90.00 Price footballs: 1954 and 1955 range priced -$48.01 Leather. 1955i Price for medium footballs Leather- — $89.99; Up. price range medium for 1954 $45.01 and AGMA Rubber — Up. $89.99; footballs: $48.01 $42.01 Leather — Rubber — b Spalding, MacGregor. Rawlings, Wilson, Includes o Pennsylvania Company. Includes Rubber acquired Company. company, Ohio-Kentucky Mfg. Includes Figure. Rankings Value Note: based on 1955 Dollar Z-36, Sources: CX 278-A to CX 353-A to Z-7.” higher-priced
“Market shares softballs *29 a Highest priced price range leather for 1954 and 1955 covered softballs soft- $16.75; balls was include Molded or Rubber over medium softballs $9.01 range 1954 and 1955 was Leather for Covered. Price for Leather Covered to $16.75. b Rawlings, Wilson, MacGregor, Spalding, Includes c Pennsylvania Company, Includes Rubber a percent. Less than one-tenth of one Figure. Rankings companies on Value are based 1955 Dollar Note. — Z-36, 353-A to Z-7.” CX 278-A to CX Sources: expanded Speculation further argument by Spalding that is made suggestion Spalding’s goods Rubber Voit in- concentration in the afhletic may potential en- declining dustry sub- and General Tire actually not is of baseballs. suggests trants into the manufacture that because stantiated. im- such list There is no evidence purports to Commission’s Exhibit 31 companies pending step except that those sporting ath- all manufacturers of closely softballs, re- now “a manufacture letic 1954 and Commission’s lated line”. purports them Exhibit list all on firms are 23 since there Commission, speak- opinion, In its appear Ex- Exhibit 32 which do not replacing possibility firm of a they “most hibit likely great assumés strong competitive factor as a too new This involves being exceedingly entrants.” as re- speculation un- to where mote, said: “ * * * der firms what circumstances these The record shows commenced business. it is for smaller not difficult grow industry, firms to Goldsmith, It is Chair- a fact that Mr. survive. also for them MacGregor, difficult man of ness, wit- the Board of According tes- heretofore, to the uncontradicted as mentioned testified timony Goldsmith, George of the witness Young Company & was one high. industry’s mortality eight rate is top producers. quality baseball handling A partial number of company This is listed in Dun manufacturing have of athletic report Bradstreet gone highest but out of business principally, baseballs but also softballs mortality among (Commission’s has been the small- 367). in- No Exhibit ” * * * single er, line firms. formation is available as to the volume product. Dudley Sports of each Com- It is out of this context pany report also listed in the same contends ly the Commission erroneous- making principally it also but mortality industry’s found that produces volley Dudley “softballs, balls, high. Support rate is for the Commis- Pitching Machines, Automatic badmin- Report sion’s statement is found in the game Shuttleloop”. ton called We are of Dun & firms Bradstreet25 in which price uninformed as to the of the base- solicited for information AGMA proportion balls or the bore response 1954 and 1955 from which no products. balance of its Longer was received are said to be “No Active for Various Reasons.” Three had These firms four cited others gone bankruptcy; into two had closed by Spalding respond did not to AGMA’s businesses, of which one suffered requests for information in 1954 and satisfy the sale of its assets creditors concerning 1955 and the evidence them Four another was “dissolved”. upon gleaned relies is reported Locally firms “Unknown & report from the above mentioned of Dun Not Listed in Directories.” Local sufficiently and Bradstreet. It is in- Moreover, formative as Commission, to the time or circumstances as found *30 concerning high the establishment of these Mr. Goldsmith testified as to the companies Spalding’s mortality industry par- to substantiate rate in the with sporting great claim that quantity concentration in the “the ticular reference to goods industry declining single companies, and athletic of individual ufacturers, line man- particularly industry it lacks substance to that come into the any go By show improper decline in the concentration of out. reason of and agement man- higher producers priced-higher quali- -capital of and lack of and other goods. ty athletic factors.” Goldsmith, you 25. Commission’s Exhibit 366. “Q. Mr. have stated you industry in that have been the for a 26. The record discloses Goldsmith’s Mr. testimony long period covering respect thirty years. in this follows: over as significant, low the accuracy Spalding’s assertions —not of and; where general in the area factors granted four the that must predomi- general firms were the line increases show companies failed line in nant.27 1954 to from of sales in volume reports all of the AGMA proportion to the' we that While conclude pro- years; the and that in those sales determining justified in Commission was individually, in duction that, merger, at the time of the declined. combination high degree was a concentration changes radi- However, none of the case, relevant lines of in this commerce sales in combined The net decline cal. goods industry namely the athletic as a in Spalding and higher priced-higher whole and in the $121,239 between the difference quality goods, athletic we are aware that $27,574,285 $27,695,524 and 1954 sales of concentration increased an regard not decline We the in 1955. merger. does not of itself taint the How significance de- substance or sufficient ever, it is a factor that when taken to finding Commis- of the tract gether with market facts should be merger “[a]lmost after sion im scrutinized determine whether industry production was total 50% merger pact of the has been such as to Spald- firms, in three then concentrated substantially lessen tend or MacGregor”, ing, Wilson monopoly to create a in violation Sec when intensified the concentration tion 7.28 given fact to the consideration was Bearing Upon Other Factors engaged primarily these Competition Effective higher quali- production sale of many gave ty smaller firms items while consideration engaged factors involved in the in the manufacture and sale you points gen- out Have ever made studies the Senate Report Industry”, surveys mortality entitled “Concentration-American eral industry? rate - S.Rep. No. [Committee Cong., Going early Print] 85th back to I 1st 133-165 “A. 20’s Sess. say (Table 40), (Table 42), would that I 196-219 266- have on occasions (Table purposes surveys. 45) (1957), certain made furnishes statis “Q. showing degree tics And what has been the results of concentra surveys? sporting such tion industry and athletic mortality “A. I think the of this ranked as one of the rate lowest in high. comparison business is concentration with other “Q. you diminishing and that Do recall industries the names com- panies industry who from 1947 to 1954. These back in statistics are prior relevant, however, the 1920’s or thereto that to the lines of are no longer in existence as such? commerce found the Commission in Connelly May your ease, namely, priced high ask, : I this “Me. n question categories anyone quality is directed toward er goods and the industry industry contemplated group you or to the have previously interrogated reports of Goldsmith AGMA. Mr. general compa- prof- about described also stresses that its net nies? from 1954 its declined to 1955 and suf- merger declines after referring fered further “Me. Kelahek: I am particular- facts, in 1956 and 1957. Such ly during as a whole. litiga- when There are number “The Witness: period years already pending, great of them over a bear who were tion was no general weight more or less in the determination of manufacturers the maim passed picture who have out of the but of this ease. issues my high mortality reference to rate has specifically great Robinson, to do more “A 28. See Decade .Handler *31 quantity companies, single of individual of the Celler-Kefauver of Administration manufacturers, Antimerger Act”, line that into 61 Colum.L.R. come go By (1961). and out. im- reason of management proper capital and lack of and other factors.” higher star endorsement contracts with manufacture and distribution advertising, pat- athletes, national fol- quality at the baseballs and arrived ents, resources lowing and facilities and conclusions: development. These research and advantages, considering com- various “In together exclu- with the man- petitive in the factors involved contracts, adoption have created sive ufacture and distribution of com- to effective formidable barriers baseballs, quality appears ex- petition entrants from new tremely Spalding’s doubtful that field in exist- or firms now from leadership line of commerce in this ence.” challenged seriously will be bar- held that similar any that foreseeable future or sale and riers existed in manufacture change anticipated in the can be higher priced product major of other existing oligopolistic situation lines. the com- this market. In addition to advantage being general petitive Spalding Com- issue with the takes distributors, Spalding, Rawl- line ings, no that there are mission and contends MacGregor, competition; over Wilson and to effective barriers many years period companies Spalding, have estab- a than Rawl- other reputations quality MacGregor re- ings, no lished have Wilson sulting acceptance difficulty entering in consumer manufac- baseball surpassing any prod- their baseballs far other ture or manufacture of by therein; any surviving competitor. found As line and uct hearing examiner, Spalding's “assumption base- of the Commission anti-competitive the official baseball balls have been stem from effects leagues major general Spalding, from Rawl- for the two line nature MacGregor Spalding inception, ings, is now from or Wilson and names, supply trademarks, both under leagues contract trade their use of require- patents, with their entire with athletes contracts That leagues, etc.,” until 1966. ments of baseballs foundation. without recognizes Spalding exclu- that the Spalding the Commission notes that by major of its baseballs sive use any from man- evidence did not introduce greatly pres- leagues enhances it claimed ufacturers which acceptability of tige consumer alleged barriers to effec- victims ‘Spald- ‘Reach’ and names the trade competition. tive ing’ these the fact that is attested general line denies that the ordinarily sold are enjoy competitive advan- manufacturers tages are sold dozen dealers at $21.60 and stresses that the line the American dozen to for $3.74 leading practically all the concerns in League to the National and $4.48 important lines of commerce relevant adoption League. contracts Similar single many companies, of which are leagues im- are also minor large companies industrial sub- standpoint from the portant factors limiting thereof, actually not sidiaries advertising promotion of single line; many to a themselves Spalding, Rawl- baseballs. purchase substantial them amounts MacGregor had ings, Wilson and sporting and athletic supply base- contracts exclusive manufacturers; long ago leagues minor the 36 32 of balls general truly as eco- abandoned In 1955 in existence. then disadvantageous; nomically that be- Rawlings together had such Spalding nor neither cause had contracts true full-line ever each always purchased manu- has factors which have con- “Other greatly enjoyed that the the lead others records factured tributed purchases general both line firms are such *32 that ucts from Rawlings the ac- other manufacturers 1956 after in increased more in pre-acquisi- 1956 after the even quisition the over those products by Spald- purchased such year tion of 1955. ing than in are relevant no com- Further, Spalding that asserts findings do not effect the Commission’s general advantage petitive accrued that the it enumerated factors which companies names trade from their line responsible acquired for the lead evi- there and that or trademarks general Despite companies. the line single en- companies dence that line many by Spalding these significant the contentions reputations joyed equally those fine general facts remain that the pat- general companies; that line the companies engaged vigorously line importance and that ents lacked practices de- enumerated which were practice license is to the universal event signed acceptance. to achieve consumer patents applicants which are under all general company participated Each line obtained; players en- under that the advertising in national record’ and the general contracts with dorsement discloses, least far at in so “any- companies line did not constitute concerned, and expenditures are that their players players or all the star where near regard in this were sub- leagues”; major on teams of or minor safely may presumed stantial. evidence as to and that there is no MacGregor pro- Wilson and each made players under contracts with number of large portionately outlays in field. this sellers; manufacturers or other baseball All four firms had established trade testimony sup- case would and that many years names and trademarks over port manufac- the contention that important which had consumer connota- difficulty have turers and sellers would no They tions. were valuable assets and contracting for the endorsement advertising necessary them was in order products well athletes. their known gain their maximum effectiveness. also contended general As found line no evidence that com- Commission each of general any competitive companies line panies obtained advan- entered into leagues. tage contracts with contracts with reason of their baseball Both leagues major leagues inception which their baseballs chose baseball Spalding’s products adopted as or other man- as their official official are base- obligation balls and or ob- are under sellers endeavored to ufacturers to use advertising them such con- until 1966. tain were' unable obtain or value tracts; similarly, arrangement that, no of this Spald- there is such that drastically selling price reduced evidence as to effect its advertising by general line national baseballs to these customers. companies or that record out other manufacturers bears the substantial number leagues general advertise. of minor are so to unable which the companies line had contracts for the leadership In its reference adoption of their baseballs as officialand single companies Spalding part line in 1954 and theory lines adheres to major 1955 had a share of such con- commerce. But relevant lines of tracts. theory accepted Commission’s if the higher quality cate- that gories general companies Each line commerce, lines of then constitute athletes, contracted with top per- star single apparent line com- it is sports formers and others the various leadership low-priced panies manifest fields for the endorsement of selling products in the manufacture and or consultative services which were general companies play line of which subject advertising pub- made the part. little licity. much companies How far how single general companies than That and other ex- Rawlings purchased prod- ploited publicity form of is not *33 shown, However, appear indicates that the evidence does but thé evidence that many finding important personalities in that warranted the Commission’s hundreds, numbering world, preva- these athletic into did exist factors and were general were four lent committed to the as far as the were some form line firms general in concerned, degree companies. particularly line The costs in such regard substantial, collectively pose this example for when ap- were also considered as to paid out barriers in 1955 to effective contracts,
proximately $148,000 new into the firms for such entrants field or from only company it is existence. obvious a financial resources commensurate Aspects engage promotional could feature. Vertical in this The Commission general companies concluded “al- Each of line though merger primarily hori- development conducted de- research and important zontal one it also has purpose improving certain for partments aspects.” points vertical products. It their to the fact inventions When new Rawlings purchased many improvements existing patents major general products practice apply made line it was reselling patents handled them on When under its them. acquired by rights patent own trade name. cites it had Rawlings’s purchases approximately products such inventions of ath- being in 371, products. true, $2,252,- an letic amount of It asserts, percent an did not affect increase of 74 base- Apparently purchases. over balls. its 1954 licenses for the use associates purchases patents freely granted these with a statement made by Rawlings’s general companies president between line in 1952: and some “ * * * companies licensed, also were but Rawlings now maintains companies the evidence is not clear that , a national sales force and has also general companies other than applied developed acceptance for its brands granted for and were licenses extensive- foreign markets. This sales force ly- - products . handles the n Rawlings Manufacturing general Company, In sum the over years becoming many gained increasingly period but it also had ex- products supply useful in sale clusive contracts to man- . n major leagues many During ufactured others. the minor n leagues. n most large years They category last 12 sales in had numbers of figures .prominent sports $120,000 have increased from $950,000 annually, world . under Compa- contract for endorsement and They ny’s products (cid:127)of their or consultation. . officers think substantial vol- [engaged advertising pub- in national ume of additional business is avail- licity large They Many sport- on a scale. able in maintained direction. this ing goods development facilities for research manufacturers do not acquired patents maintaining have new inventions the means sales large improvements existing their in- activities so and effective as Company. products ventions on athletic those our Such com- panies adequate than baseballs. need .other the more sales representation position which our large Each these factors looms offers.” general giving to the four line com leading panies respective positions Further, the Commission states that goods industry. Spald major in the athletic of the 29 handled regard ing’s contentions in both are in negative, pointing nine, including golf main equip to matters and tennis ment, support by Spald that were not shown counsel which are manufactured complaint ing by Rawlings; before prior the Commission. and not *34 n Rawlings 1952 state- merger" purchased re1 characteri2ied the Rawlings’s president mere products from ment quirements nine of these of. puffing in event and contends that manufacturers and other pur- products Rawlings, $2,252,371 by acquiring Com of the worth that Rawlings only $142,199 reasons, it so if chased mission golf equipment represented desires, prevent man and tennis firms that can selling man- could products from the nature ufacture these Rawlings not, Rawlings important ufacture and could an and thus cut off Rawlings’s pur- Com 1955 and 1956 for their merchandise. outlet products to but these amounted reasonable chases there is mission feels industry’s certainty that it occur and very will fraction of the small by pre-merger supported this view equipment golf ac- tennis sales by Spalding that “where announcement cording AGMA census. possible practical both much of pur $2,252,371 of analysis An Spalding’s will manufactured lines be other manu from chases ap Rawlings’s seems factories as 29 discloses: in 1955 facturers propriate.” ' firms purchased from 1. Items other, Spalding: than Rub U. S. from *Golf balls 25,599 $ ber 31,983 bags from Wilson Golf 5,800 Hofran, Inc. from
^Baseballs & Hillerich from Bats 73,170 Bradsby Mfg. from Schutt Masks 3,770 Co. Rubber from Sun
^'Footballs - 23,400 Co. Rubber
*Baseballs from Sun 118,989 Co. Shuttlecocks
Badminton " 6,250 from R.S.L. Co.
*Volley Rub- balls Sun from 16,768 ber Co. Sun Rub-
'"Soccer balls from 15,620 ber Co. $321,349 purchased Spal- 2. Items
ding: 126,597 equipment Golf and tennis Clothing 778,162 3. Shoes and Unspecified 4. miscellaneous 1,026,263 items
$2,252,371 * by Spalding. Similar manufactured
29.
Exhibit No.
Commission’s
relatively
clothing
with-
it was
Shoes
were of course
is a
small amount
by Spalding
competence
manufactured
there
of the Commission
large
uncertainty
types
was a reasonable
as to the
conclude that
merger
quantity
following
pur- probability
of miscellaneous items
longer
by Rawlings.
suppliers
no
chased
would
Of course there
support
prediction
Spald-
products.
upon
no
called
these
*35
prevent
would'
its
Division
by the
aspect raised
Another vertical
shoes,
purchasing
from
for resale
cloth-
product line
concerns the
ing and other items not manufactured
Spalding did
gloves
mitts.
baseball
advantageous
by Spalding on an
basis
was one
them but
not manufacture
apparent
prior
and it
products.
largest
these
sellers of
the
Rawlings,
merger Rawlings
purchases
found such
hand,
the other
steady in-
worthwhile since there was a
largest
them.
manufacturer
handling
type
crease in
mer-
base-
Spalding’s purchases of
source of
chandise from 1941 to 1955.
On
gloves
mitts,
far as
so
ball
Spalding
other hand
did
six
manufacture
discloses, may
tabulated
evidence
purchased
of the items
sources
from other
$206,176.
for a total value of
While this
follows:
Spalding’s
Mitts
Baseball
Gloves
Purchases
1954,1
1956
1955 and
purchased
Spalding
gloves
1
1954
Exhibit 124 reveals
Commission’s
186,243
$732,812.75,
aggregating
units for
but it does
mitts from manufacturers
However,
suppliers.
Exhibit 124a
Commission’s
the name of the
disclose
$236,742
gloves
appears
Spalding
the amount
and mitts to
sold
it
that Wilson
in 1954.
Exhibit 125.
Commission’s
pre-merger period
This exhibit
refers
Exhibit 126.
Commission’s
supplied
Spalding.
gloves and mitts
the value of
does not disclose
gloves
longer purchased
Spalding
and mitts from Wilson.
no
After 1956
by Rawlings.
tirely
The total
found:
The Commission
purchases
amount of its
from the
merger, Spalding’s
“Prior to the
suppliers dropped
other four
from
higher priced
suppliers
principal
$517,433
$455,149
in 1955 to
Rawlings,
gloves
Wil-
and mitts were
Spalding’s purchases
1956. In 1956
MacGregor, Kennedy Sporting
son,
from
such
Wilson
Manufacturing Co., Inc., and
Goods
$387,321.
1956,
amounted to
After
Manufacturing
and Dean
Stall
Co.
purchasing
Spalding discontinued
requirements of all
Its
these items
(Em-
from
these items
Wilson.”
being supplied
are now
phasis supplied.)
almost en-
from another
whether
price.
and mitt
transfer
companies
in 1956.
nedy
purchases from
purchases
mate
Commission,
creased from
this case to
cause the
ing prices
gories
and
Spalding
lower
picking and
are
Furthermore,
or not
suppliers.
emphatically
while
evidence
impossible
shows
based
was the
Stall &
priced gloves
for
its
distinguish
but
$74,187
company,
claiming
MacGregor,
the
purchases from certain
the AGMA
pointed to its
upon
actually
actual
choosing
concerning Spalding’s
result
Dean
It conceded
disagrees
fictitious
Royal,
dollars
between
and
declined
sold
Wilson,
among
price cate-
Spalding’s Board of
purchases
mitts
record
suggests
$220,730
with
low
question
paid
higher
legiti-
glove agrees
from
Ken-
that
sell-
the nor
be-
in-
mony
from
mission
not
refers to
ing
that
in the
reject
aminer
company had
inference that
selling gloves
these rivals of
tion
The AGMA Census
this
injury
Examiner and
the value
Mr.
even
them
concerning
the inferences
competence
regard.
pointing
disagreed
MacGregor “suggested
Goldsmith,
lessening
to
though
declined
him
competitors.”
and mitts
been
of all
that- the lack of
out that
[*]
* supported
of the
Spalding’s
adversely
or ceased.
gloves
had no
of
drawn
Chairman
after
Reports indicate
competition
gives
Commission
and mitts sold
by
Hearing
“the
It
by Spalding
difficulty in
affected
effect
rise
purchases
the
acquisi-
statute
Hear-
with-
testi-
Com-
from
*36
and
Ex-
his
to
$10,-
approximately
1955 amounted to
in
597,060. Spalding
respect
position
Spalding in
of
this
important
an
furnishes
table
is not tenable. The above
non-producing
It
seller of these items.
purchases
and dollar value for
both units
purchased $1,144,000
prior
them
of
by Spalding.
apparent
It is
made
roughly $925,-
merger of 1955 which
of
gloves
Spalding purchased
in 1955
higher priced products.
the
000 were
of
amount
from Franklin in the
mitts
leading
Spalding acquired
manufac-
the
Royal
$141,000
in the amount
and from
merger
gloves
turer of
and mitts
its
$74,187.
elimi-
Franklin was
of
In 1956
competent
Rawlings
which was
purchases
except
and the
nated
for $3.56
margin
large
supply all
with a
its needs
$220,730.
Royal
increased to
from
long-
no
manufacturers were
over. Other
not dis-
does
It is
that the evidence
true
suppliers
them.
required as its
er
per
these
actual
unit cost of
the
close
sufficiently
pattern
purchases,
but the
Even if some of the Commis
reasonably
it
believable
aspects
make
sion's views as to
clear to
vertical
Wilson,
merger
gloves
obscure,
mitts sold
are
that
Rawlings,
can be
Kennedy
MacGregor,
merger
Stall
Spalding
no doubt that since the
higher
power
priced
purchases
than those
has the
to control
& Dean
by Rawlings
Royal.
made
from
of Franklin
manufacturers
prod
other than
in the area of
It is also clear
did not
by Spalding
made
and sold
ucts
not
but
purchases
priced
its
transfer
Rawlings.
Similarly
manufactured
gloves
mitts from
one manufacturer
power
has
to items man
simply
pur-
decreased
to another.
its
Rawlings
ufactured
sold
not
but
gloves
higher priced
chases
and mitts
by Spalding to look
made
to- its Rawl
suppliers other than
from
after
ings’s
supplier.
Division as its sole
merger
and made its lower
looking
to both
Firms
Rawlings
Royal
purchases from
alone rather than
Royal.
as customers for their
Franklin and
thus be eliminated.30
Hearing
could
Little defini
Examiner found that nei-
drying up
Spald-
Wilson,
Bowman,
evidence
tive
President of
Mr.
ther
Clayton Act”,
comments, Bork,
7
39
der
“Anti-
Section
critical
30. But see
(1961).
832,
Texas L.Rev.
Doctrines Un-
Enforcement
findings
re-
of custom
sion’s]
as' sources
are entitled to'
introduced,
spect;
supply
but
must nonetheless
to other firms was
justify
present
be set aside
the record before
but sufficient
when
clearly
finding
precludes
Appeals
there are
Court of
its
merger
aspects
taken
decision from
[Commission’s]
vertical
being justified by
the case
fair estimate
all
the other evidence
testimony
support
wit-
effect
the worth
conclusion
'
substantially
judgment
merger
“may
on
nesses or
informed
be
its
compe-
special
create
tend to
matters within
lessen
monopoly.”
tence or both.”
op Appellate
The Function
Review
determining
question
We
unmindful of the admoni-
probability, however,
reasonable
is well
tion,
by Spalding,
cited
in Universal
“weight
given
settled that
Corporation
Camera
v. National Labor
the facts and circumstances
admitted
Board,
474, 490,
Relations
340 U.S.
71 well as
reasonably
the inferences
to be
456, 466,
(1951)
S.Ct.
L.Ed. 456
that:
drawn from them
for the Commis
[are]
“-x- # * Congress
sion.”
imposed
Federal Trade
has
Commission v.
Paper
Association,
Pacific
Appeals]
responsibili-
States
[Courts of
Trade
ty
52,
assuring
63,
255,
U.S.
S.Ct.
71 L.Ed.
[Commis-
*37
(1927);
keeps
Products,
534
Carter
Inc.
sion]
within
reasonable
v.
grounds.
Commission,
461,
responsibility
Federal Trade
That
268 F.2d
not
(9 Cir.1959)
491
less real
cert.
because it is
denied 361 U.S.
limited to en-
884,
155,
forcing
(1959).
80
requirement
S.Ct.
4
the
L.Ed.2d 120
that evi-
appear
appellate
The function of the
dence
court “is
when
substantial
determining
upon
viewed,
limited to
whole, by
on the
whether
record as a
appears
of
review the whole
authority
courts
record it
invested with the
enjoying
findings
prestige
supported
the
of
Commission’s
are
the
the
32
Appeals.
Courts
Bristol-My-
of
The [Commis-
substantial
evidence.”
together,
31. The vertical effects of the instant case
“All of the cases taken
how-
“Mergers
ever,
Bock,
are
kets,
discussed
and Mar-
make it clear that the vertical ef-
Analysis
acquisition may
An Economic
of Case Law”
of an
fects
under
come
(National
Board,
judicial scrutiny long
Industrial Conference
before market
Inc.,
Economics,
(General
Studies in Business
is foreclosed.
Motors) decision,
the Du Pont
69, 1960), pp.
example,
Number
58-59 where it
court
necessary
is observed:
found that
it was not
“ *
**
aspects
purchase
[T]he vertical
of an
to
all
General Motors
quirements
of its re-
acquisition may
found
be
to touch both
for automotive
or
finishes
suppliers
Clay-
former
the
and former
outlets
fabrics from Du Pont in order for
acquired
acquiring
(as
play;
or
unit
to
into
ton 7
necessary
come
nor was it
Maryland
Yirginia
E.Supp.
competitors
[167
that Du
Pont’s
(D.D.C.1958),
completely
45
rev’d 362
458 [SO
U.S.
out
shut
from sales to General
847,
(1960),
4
880]
S.Ct.
L.Ed.2d
167
F.
The same considerations hold
Motors.
Supp.
(D.D.C.1958),
F.Supp.
Maryland
Virginia,
Crown,
799
168
880
Beth-
(D.D.C.1959),
E.Supp.
[80
aff’d
625
Commission,
v. E. I.
States
Du Pont De Nemours
Trade
&
ers
v. Federal
Co.
586, 607,
884,
Cir.1950).
Co.,
872,
(4
Section
U.S.
S.Ct.
vant lines commerce of percent segments of then of the total was the businesses stantial of firms, Spalding, Rawlings. in concentrated and three MacGregor; Wilson thereafter that Summary and Conclusion Spalding’s four were more than sales recapitulate substantial To was ranking times that firm of the fifth suscep- evidence before five times sixth more than that of the by validly drawn tible the inferences of ranking firm. finding justify in that it But evidence also engaged primarily disclosed that primary general concern of goods four in the' line production of athletic companies production was categories, higher higher and sale priced quality higher priced higher of goods; baseballs, quality regard athletic particularly higher that in softballs, 1955 in the con- basketballs, footballs higher quality stituting of line separate of the four and distinct companies produced merger percent of the upon commerce which quantity percent sales; similarly 83.4 of the had be- measured. Spalding’s percent share was 24.5 fore it substantial evidence quantity of the percent in- and 26.5 of the to conclude that value, Rawlings’s AGMA, percent by dustry 15.3 whole, reported as a quantity percent and 13.9 of the within a line of commerce constituted value; merger Clayton reason of the meaning Section per- became the leader with a entire from the Act. so conclude We centage percent quantity of 39.3 record before the Commission percent and 40.4 value, of the total fol- it. construed law as we have heretofore percent lowed Wilson with 26 There was likewise evi- substantial quantity percent and 29 value dence from which the Commission found MacGregor percent quantity with 15.4 prior the relevant percent and 16.1 of value. It was also lines of commerce were dominated -Spalding acquired shown that similar general firms, Wilson, four Spalding, leadership priced higher in other MacGregor Rawlings which, based categories. quality statistics, ap- on AGMA proximately accounted for percent giving Spalding’s the total in- consideration to dustry production and sales in status and 1954 and to the various percent 1955; involved, 46.4 next factors justified the Commission was percent concluding 15 firms accounted appears 34.7 that “it production extremely remaining total Spalding’s and the doubtful lead- percent ership accounted for 18.9 this line of commerce will be total; challenged acquisi- seriously reason of the in the foreseeable dustry-wide purpose ply prohibitions scale. [sec § ease protect competition produced 7] tion is to an each absorbed concern which inconsequen- line of commerce in each section of a multitudinous number of *41 ” 40 country.’ products. tial and minor utory In the stat- “39 S.Rep. p. any phrase commerce’, No. 1775 ‘in line of “40 H.R.Rep. p. emphasis ‘any’. No. 1191 8.” the word entitled to Any Corp. To like effect is Crown line of commerce Zellerbach does not mean the Commission, commerce, v. Federal Trade 296 same as the entire line of F.2d (9 1961) engaged Cir. where it all lines of was said: commerce in or “ * * * by upon acquired All that the Commission was touched concern. required to do was to ascertain line of commerce The need not even be a product sufficiently large part any find a line which of was the business of of meaningful corporations (Footnote inclusive to be in terms of involved.” omitted.) otherwise, pp. trade realities. If it 296 F.2d at it 811-812. practical impossibility ap- would be a to change antici- likewise can be ufacturer. The Commissionwas justified that future or holding ex- oligopolistic in pated that there was situation in the probability isting reasonable manufactur- that market.” Rawlings competed ers also who with will prior to that further shown It was prod- be foreclosed from outlet of Rawlings experiencing merger was formerly Spalding. ucts sold to growth expansion; from rapid that An increased examination of the entire record assets to 1955 its total persuades' by increased that percent before the Commission us its net worth evidence, by from percent; nation-wide was substantial that it had together facilities, trade which in- a well-known with reasonable distribution engage therefrom, name, ferences to to be'drawn the Com- and financial resources advertising holding justified re- that the mission was in in national active acquisition by Spalding development; had exclusive it effect search Rawlings “may professional substantially adoption with to lessen contracts be competition leagues con- mo- and endorsement or to tend to create a and teams Rawlings athletes; nopoly” in each of the relevant lines tracts with star designated by major products in the Commission sold 29 of the commerce goods industry Clayton in and that Act Section 7 of the merger. Spalding, manufac- as amended with tured; 18 which was violated along Spalding, Wilson The order of the Commission will MacGregor competent com- it was and pete affirmed and enforced. general on a line basis. Judge (concur- KALODNER, Circuit small shown that was further ring dissenting part). part in in single many were en- gaged and sale in the manufacture majority’s I do not subscribe goods none quality lines while low view that the Commission Federal Trade quantities goods manufactured substantial properly “athletic classified the They higher priced lines. industry” of com- as “relevant line' significant competitors in the field merce.” used broad The too Commission n general and the doing sweep so. brush and to wide a companies predominated. the Com- lines included industry” mission in justified find- the “athletic was basketballs, range baseballs, foot- ing left that the elimination softballs, balls, balls, golf balls, MacGregor firms soccer as the Wilson volley equal balls, and badminton compete tennis balls capacity with the items diverse shuttlecocks shoes, such Spalding in the terms - leg kidney pads, hip, higher, production and shoulder quality area of helmets, golf guards, clubs, box- football concentration of frames, ing gloves, masks, racket markedly tennis category intensified in that Rawlings. etc., men- items Numerous absorption etc. in terms in common tioned have little although Finally, clearly apparent less materials, physical characteristics, raw aspects merger than the of horizontal uses, pric- manufacturing processes, end justified holding the Commission ing ór consumers. by Spald- that the implications Commission, also had vertical Neither the nor ma- reasonably probable jority, demonstrated, example, it was has golf bags why will how or can be foreclose manufacturers related “relevant, Raw-lings from their outlet of as a line of com- competing of which was a merce.” man- “oligopolistic” percent quantity prices 41. The characterization at ducecl 80 reported practically parallel used warranted Commission is to AGMA *42 category higher priced respective price and in their lists. ’ prior pro- merger where firms four just little— as There is much—or affinity be- community relevance or racing and tween the of horse business racing between automobile golf bags. cannot One baseballs and imagine racing and classification of horse racing “relevant
automobile a
commerce.” holding of concur, however,
I
my substantial brethren “there suscep-
evidence before the Commission validly drawn
tible the inferences finding justify it to it in engaged primarily production of athletic higher categories, priced, quality baseballs, particularly regard to softballs, basketballs, con- footballs and stituting separate distinct line merger upon which the commerce the record
be justifies On this measured.” score holding effect Rawlings “may be substan-
tially competition, to lessen tend monopoly”
create in violation of Sec- Clayton
tion 7 of the Act.
Ralph Rosa, Pa., ap- Lewisburg, P. pellant.
Lloyd Bates, Jr., Miami, Fla., G. appellee. BELL, Before CAMERON and Cir- Judges CARSWELL, cuit District Judge.
Ralph ROSA, Appellant, P. v. PER CURIAM. America, UNITED STATES of Appellee. having Appellant, received the No. 19329. mandatory minimum sentence for violat laws, federal narcotics U.S. Appeals States Court of United 4704(a) 4705(a), C.A. re seeks §§ Fifth Circuit. collaterally ground on the lief that he 10, April explicitly opportu afforded was not nity 32(a), Fed.R.Crim.P., Rule under making U.S.C.A., statement his imposed. before sentence was
own behalf “not of itself an error This is that can * * attack, be raised collateral *.” States, United U.S. Hill v. 417; 468, 7 L.Ed.2d Machibroda S.Ct. v.