Aetna Portland Cement Co. v. Federal Trade Commission

dismissed, and appeals promptly will be less ordered— so cause it is

Dismissed. concurs

SPARKS, Judge, Circuit

result. et al. CO. CEMENT

AETNA PORTLAND COMMISSION. TRADE v. FEDERAL al. v. SAME et INSTITUTE

CEMENT other cases. ten 8393, 8386, 8389, 8371-8373,

Nos. 8399, 8402, 8410. Appeals, Circuit. Seventh

Circuit Court

Sept. 20, 1946.

EVANS, Judge, dissenting. Circuit Leisure Newton Donovan Lumbard & Donovan, George William and S. Irvine J. Withrow, Jr., Leisure, R. Ira C. James Bond, Henry Werle, Herrick and all Compton, City, York William G. New Cal., Burnett, Angeles, Breck William D. of Los Keeseville, Y., Dorr Casto N. petitioner Portland Cement for Monolith McAllister, McFadden Thomas P. J. City, Co. et Brick, York al. all of New Francis A. 111.,Ed- Chicago, Ragland, George Jr., Counsel, Kelley, William Chief T. (Mur- Hanlon, City New York MacIntyre, ward K. Wooden and Everette Walter B. Francis Seeley, and A. ray Quigg, Joseph Counsel, T. Com- Federal Trade Assts. Chief City, coun- Walsh, York all of New C., X. mission, Washington, D. for Cement Portland sel), petitioners Aetna spondent. Smith Co., S. and Blaine Cement Institute KERN- MAJOR, EVANS, Before et al. ER, Judges. Circuit Nor- Zimmerman, W. Harold Edward A. Zimmer- man, Engelhardt, and William R. 111., Judge. Norman, Chicago, MAJOR, all of Circuit man and pe- Mass., for Pound, Cambridge, Roscoe several, petitions, joint These Mfg. Marquette Co. Cement titioner Institute, filed behalf of Madison, individuals, offi- Fox, Jr., producers and Marshall P. Walter C. Greg- Institute, Chickering review Clark, agents & W. cers and Herbert Morrison, Sutro, modify an order Pillsbury, of and set aside

ory, Madison & by Federal Foerster, Clark, of issued Hohfeld, & all cease and desist Shuman against July 17, 1943, Francisco, Cal., Witherspoon, Trade Commission A. W. San petitioners (respondents Kelley, before Witherspoon, Witherspoon & all and opinion Hall, and referred to Wash., Spokane, of Chaffee E. and such). Gerdes, & Robert Earl & Hall H. and Francisco, Cal., Gerdes, of and all San separate been filed in have Nine briefs Lyman, Plumb, Overton, Prince Ver- & respondents, seven on behalf of this court mille, Lyman, of Los and Edward D. all corporate respond- singly seven of Cal., 8393, Angeles, 8389, for Calaveras Ce- petitioner 8373, 8386, 8371, in Nos. ents ment et al. Co. been filed 8399 and 8402. One brief has No. respondents, 59 corporate behalf of Wright, Jr., Charles and A. Laurence offi- certain and the Cement Institute Masselink, Mich., pe- Detroit, both of for thereof, certain cials No. and titioner Huron Portland Cement Co. Institute, agents No. and of officers Leader, Little, A. Francis Le Sourd and be- 8410. filed on Another brief has Wash., Palmer, Seattle, all Le & of Sourd corporate respondents, of of half seven Cement, petitioner Superior for Portland corporate No. In re- 8372. No. Inc. rely points spondents upon the made Weter, S. Harold Shefelman and Roberts Aetna, No. briefs al. 8360. et These Shefelman, Seattle, Wash., pe- all of & comprise printed pages. 775 total of about Portland Co. titioner Northwestern reply, a brief In the Commission has filed Myers Works, Louis Pierce W. and both pages. Reply 300 briefs of more than have Myers, Los Angeles, (O’Melveny of Cal. & by respondents with been filed a total Wright, M. of Los Angeles, and Lauren addition, 444 pages. respondents about Cal., petitioner counsel), Riverside designated Appendix what have filed Cement Co. containing A, consisting four volumes Hershberger, Elbridge H. H. Con- digest voluminous facts. statement of John Knapp, Cushing, and Hershberger dee argument This court heard oral for three Stevenson, 111., Chicago, all of 1 30, May Nathan L. days, May 2, 1946. April Miller, City, York Roger of New reported, M. argument was transcribed Blough, Pittsburgh, Pa., for petitioner to the court and furnished a volume Atlas Universal Cement Co. pages. than which totals more Davis, B. Murphey Robert Alex twenty W. pages of the Commission’s Some Cal., Angeles, Los both of for petitioner findings devoted to naming are Portland Cement Co. respondents California corporate and a narration certain So pertaining competition information resulting to each. sale material, foreign far cement, (7) interpretation as here such information naming do with of and State formulation the Institute of official incorporation corporate respondent, policies industry of each for the where individual place location of its of business as action might breaking result down producer cement, pricing system. be- when each date Institute, came a member of the 2 charges prices Count period during as such. continued pursuant made al- to the combination as corporate respondents located leged prices in count not actual thirty-six States, different in fact ceived because include the cost portions of the United States. Eleven transportation; that the each true respondents such in Pacific are located seller are the realized amounts Rocky Coast States west Mountains. (called nets”) -“mill after deduction of costs; transportation the variations complaint The Commission’s consists in such mill nets have resulted from the counts, charging more two both that “for alleged “multiple combination to use years past, respondents eight last basing point system” and dis- constitute maintained and now have in a com- effect price by among criminations in each seller among hinder, bination themselves less- customers; his and that the to in- effect is en, competition restrict and restrain jure, destroy prevent competition in price, among producing * ** among producing vio- under- made effective mutual Clayton Act, lation of Sec. employ, tiy standing agreement * * * Act, amended the Robinson-Patman employment actual what U.S.C.A. 13. § multiple point sys- is known basing aas pricing,” quot- tem of which in It will on results thus be noted that the restraint price by competition alleged of an identical all in both counts of producers given complaint respond- seek producing who business at is between alleged alleged destination. This combination to ents in and that discriminations competition, be 2 an method of in vio- apiong unfair count of each the customers words, 5 allega- lation of Com- seller. Sec. the Federal there is no Trade Act, 15 competition U.S.C.A. 46. tion § mission on restraint between customers, allegation and of dis- 1, heading Count under entitled criminations between customers of differ- system effective,” making “Methods respondents. producing ent practices enumerates other and means used by all respondents, Answers filed were sup- cooperatively pursuance of and denying allegations complaint as combination, port alleged of the follows: understanding, agreement or combina- (1) agreement an prices determine Many tion. answers also forth set rate using rates contained predicated various affirmative defenses In- prepared and books distributed practices policies. their individual stitute, regardless accuracy of the of such 1, 1937 alleged Frоm December until November rates and with result that offi- nullified; 29, 1940, (2) agreement intervals, with evi- cial tariffs are an some short transit, dence trial to eliminate diversions of was taken before a cement examiner appointed by allegedly Commission. result de- evi- concessions transferees; 49,000 (3) dence prices pages an consists of about livered 50,000 testimony pages oral agreement to Fed- and over thwart of the of ex- efforts report hibits. trial examiner filed government to secure f.o.b. mill his eral cement; (4) 1941, agreement arbitrarily May on an on the evidence to which exceptions classify respondents. were filed customers to sell argument “agreed fall within who and Briefs filed and oral middlemen ”; arbitrary a ‘cement dealer’ definition April had the Commission in before May July 17, 1942. On (5) understanding mutual and concerted the Commis- findings conclusions, uniform sion entered its to use of sale and action terms discounts; 171 (6) pages agreement printed prevent cover

539 1104 referred (generally S.Ct. L.Ed. Cease record. It also entered its Order to case), ancillary res orders to as the old Cement makes certain Desist and adjudicata determinative denying or is otherwise motions theretofore made com- respondents. and the issues relevant to count of the petitions review just plaint. common filed The issues stated are set aside the order were Commission’s respondents. to to all of July 26, 1943. Pursuant court granted, respondents extension of time which are Certain other raised issues are March statement filed their pertinent respondents. only to some points and a additional motion to adduce (1) that'assuming Such issues include By dated evidence. court order of this found a nation-wide has been July 31, 1944, addi- motion to adduce nor charged, there is neither preju- denied, tional evidence was without proof respondents were that certain of the being dice to time renewed at the thereof; (2) .respondents members hearing on merits. deprived have been constitutional by the The contested issues are stated rights process of due of law because of respective parties in numerous and divers prejudice bias and Commission and ways. present questions They factual both case, (3) pre-judgment legal. fundamental is- We think the jurisdiction as the Commission is without complaint sue under count to certain because sales (1) parts, divided into two whether solely of cement were within the made Commission found in which their located and State mills are conspiracy, have entered into a nation-wide engaged in no manner in interstate charged, competition restrain commerce. the sale cement use make pertinent At it seems multiple pricing, in general statement relative to the Sec. violation of Trade of the Federal which, industry. binding agent Cement is a Act, (2) whether agency through when mixed of water made, finding, substantially supported sand, ingredients, stone or other such by the record and constitutes a violation of per- produces concrete mortar. It is a law. readily product ishable which cannot 2, appears Under count issue pur- produced stored and is therefore whether the combinаtion or al- by chased the user as needed. The location 1, leged exist, in count if found resulted by primarily of cement mills determined in in mill variances net availability materials, of raw but sources of corporate spective vari- fuel, prospective proximity demand and respective price ances in their delivered and access to markets also considered. are quotations by not for accounted differences mill for manu- The first the commercial respective thereby delivery, costs country in facture of cement was es- constituting unlawful discriminations Pennsylvania seventy tablished some customers of cor- between the same years ago. Prior to cement was that time Clay- 2 porate respondent Sec. under imported Subsequently, from abroad. Act amended. ton gradually spread manufacture until plants by producing other issues raised rea- are now cement located Numerous are (1) thirty-six respondents’ that the at least States. On date contentions son prejudicial error in complaint, 2, committed July 1937, 74 pro- Commission 144 ducing operating reception upon which its of evidence plants. 19 part packing cement mills and Such predi- in whole or in findings were rejection mills in all but a few instances cated, evi- are located well as ; material, primary raw (2) order the site that the to cease and de- dence mills, is, jurisdiction or shale. Com- limestone Some exceeds the sist however, are located with reference to the for and should be set aside mission plants Packing fuel. in- reason, (3) source are the decision of the large variably points at or near Mfrs. located Supreme in Cement Court Protective States, 588, consumption, shipped bulk 45 cement is v. United U.S. Ass’n case, where recognized points old Cement quantities for large water in these (268 page found in U.S. maps the court stated packing and Numerous sale. 1104): page L.Ed. S.Ct. several are the record show that there thoroughly standardized grouped number mills areas where a are “Cement is a recognized proximity product.” in close to each other. is also fact 20(b) r states Finding the Commission. ‍​​‌‌​​​​​‌​​‌​​​​‌​‌​​‌​‌​​‌​‌‌​‌​‌​​​‌‌​​​‌​‌‌‌‍national Cement is not on a marketed specifica years many minimum “For (Par. scale. As found Commission portland stand tions for cement have been bulky heavy 3(a))1 : “Cement sub ardized and all cement sold has been commodity transporting it and the cost of specifications.” ject to such minimum from of use manufacture minimum discloses that standards- record generally a substantial constitutes steadily increased for have been cement Freight charges the delivered cost. of 300 intro specifications were since standard quite per delivery barrel Society of Civil duced the American usual, per charges approximating barrel $1 Society for Engineers and American uncommon, in and in extreme Testing While Materials charges delivery stances sometimes pro cement Commission has found that $1.33, $1.52, and reach amounts such as mini has exceeded duced some mills transportation per high $1.71 barrel. The specifications, mum record discloses cost constitutes one of the factors buyers controversy will not without have contributed extension of to. another, re pay more for one brand than throughout manufacture minimum gardless of variations above the United marketing States:” The area words, inter it is an standards. In by freight each is thus limited and, changeable the- product as some of competitive price factors, mills and most stated, cement.” witnesses “Cement is output sell the bulk of radius within a “ ** complaint alleged, a differ it is of not more than two to hundred three only cent' one ence miles from mill. away (10) will business barrel deflect largely is used the construc- another.”' one manufacturer permanent tion of structures. This ac- 9(a) “A difference Finding fact, doubt, counts for the that there per barrel small as one cent any competition little between the users seller to another.” divert business one and, noted, already of cement as we have :2 brief states in its The “ competition alleged to be restrained * * * fraction difference of producers, confined between per barrel on sealed bids of a cent discrimination between customers ordinarily will large Government orders producer. the same As to use made award.” determine the cement, 3(b) is states: “Cement construction, highway in used street usually paper or packaged in Cement is power, irrigation, in water and flood con- each, pounds bags containing cloth works, heavy thus, trol in most construction packaged bags four constitute when work, general building, public in in various weight which cement, gross the barrel blocks, production pipes, projects, in the by Commis- pounds. found the As is many products, in customarily and other other (3(c)): “Manufacturers sion ways. con- In of these uses some by for re- to dealers market cement sales ** part very total substantial the stitutes periods busi- *. In of normal sale- project.” used the of all materials cost most ness, the to dealers constitute sales * * *.” distribution important channel of perhaps than more dur- point out that goes on to This was highly standardized. product is paragraph the findings and the dicate letter ar- the are Commission’s The sub-paragraph. by designated paragraphs num- ranged in paragraphs contain Some bers. quoting 2 Hereafter, Com- sub-paragraphs when the des- are numerous ignated mission, Hereafter, from its brief filed in it will be refer- letters. otherwise noted. finding, court unless ring will in- this numeral the complaint years.” filed eight The years of depression ing the 2, 1937, organized July and the Institute was agencies governmental were made to sales August Evidently 1929. it was intended large scale. ón a inception conspiracy to fix the the located 30,000 dealers There are some charged prior organization at a time throughout cities, hamlets towns fact, appears case Institute. handle country. free to dealer is Each theory upon to have that been tried chooses; he of cement several brands conspiracy for as had been existence several, sub- fact, most them handle long thirty-five years. Respondents one. stantially all handle more upon filing assert that court are the that dealers concedes Commission for the they the Commission’s learned brief There business. “backbone” first time that Commission’s it was the respond- support of voluminous evidence position conspiracy charged came that the practically are assertion that dealers ents’ organization into existence with purchase on unanimous their desire Institute. Undoubtedly assertion Commission price basis. The a destination sustained and the Commis- the record assertion; fact, it dispute does sion’s brief. states: Commission 7(a) Finding substantially it. corroborates corporate petitioners “Each of [re- “Substantially all sales of cement states: * * * peri- spondents] a substantial corporate respondents made are time, directly with od itself associated is, at price; the basis of a delivered combina- constituted location at determined membership in through tion the Institute delivery of the cement is made actual * * point: con- At another “The purchaser.” stated Commission's counsel spiracy charged against Institute anything “If before the examiner: there is It dur- and its members. what did I think in this case shown ing the existence that con- Institute us, again, shown over and over stituted the and the order conspiracy requesting busi- was the usual method of against cease and desist directed on a basis.” reason ness destination Institute, things.” Referring those buyers sold are so insistent cement be Commission further states: “It is the price is their desire to at a destination them, chief common united bond which know how will them delivered. much it cost purpose which is the core of the common especially who This is of contractors true every conspiracy.” Again Commission large use amounts cement. The difficul- findings as to their Institute “The buyer ty who confronting otherwise sufficient to make them membership delivery wants to know the cost at is that program.” responsible Institute’s for the required complicated to figure he appears plain Commis- rather railroad tariffs which constitute a material first stand as to sion took definite part of such cost. is also much evi- There inception time producers of dence to the effect respondents’ conten- when confronted cement, producers general- in common with old Cement case ad- tion that the was res ly, dependent favor of involved, the issues judicata of here customers and must establish their sales improperly consid- approval.' policies All so as to meet their practices to and cus- ered evidence as the however, cement, not sold a de- on "industry prior cement to toms price livered basis. Some was on sold reply Institute. to organization of the plant basis, f.o.b. made and Commission respect, in this respondents’ contention no of a on of re- refusal “As stated elsewhere spondents on sell to the latter basis. Institute rely upon the acts we right our since 1929 its members Alleged Conspiracy. The Duration of the petitioners’ [respondents’] claim rebut to by- complaint no was the fixed time as to the evidence The competitive inception alleged product normal evolution in but merely alleged years.” “for prior existence than more price or “3. between Discriminating Desist. to Cease The Order sys- among respective customers Insti- against the is directed order mill net tematically accepting arid charging corpor- tute, agents, and officers necessary prices which the amounts differ respondents: enjoins respondents.3 ate produce purchasers to delivered costs to “ (cid:127) * * * into, continu- entering from to identical costs available with delivered any in, carrying out ing, cooperating or purchasers from through purchases such action, under- planned course of. common respondents. other combination, or con- standing, agreement, Using substantially sim- any means “4. any among two or spiracy between ilar those specifically to set out in any between respondents, or more of said order purpose effect of ac- with or others respondents and more of said one or things prohibited by complishing any any hereto, perform do or parties to this order.” things: following of the for, point We set forth the*order at prices at Quoting selling or cement “1. purpose clarifying somewhat con- or in pursuant to calculated or determined precise objective fused situation as to basing-point multiple accordance with the proceeding. order leaves system; quoting or sell- delivered-price or bpt purpose room for doubt that the accordance to pursuant or in cement only multi- Commission is outlaw not plan system which re- any or with other ple point systeiri any price but prices quotations or price sults identical price systems permit selling which or points quotation sale for cement “pursuant with cement to or accordance respondents purchasers particular or to any plan system,” other or which results pre- system, which using plan or or prices prevents pur- identical or which any advan- purchasers from vents buying chasers from from producer one one or tage price dealing with more price a less from order than another. The any of the other against plain purpose further makes that it is the respondents. require producer Commissionto each sup- in aid or “2. In connection with or sell mill an f.o.b. basis. acts, practices or system,

port any plan, enjoined numerous other acts (see prohibited paragraph 1 above fol- 4) practices footnote com- [then which the injunctive plaint alleges which paragraphs low purpose sixteen were utilized for the making multiple basing summarize effective the footnote4]. corporate originally requirement invoicing were 75 There purposes, order directs b. mill the f. o. shall respondent specified deductions, (i) Cas determined be closed case any Company. Agency Government talia Portland as to de- so mill; (b) prive Refusing any part 4 (a) sell f. b. o. the Government of selling mill, grant special refusing, to al- o. land when f. b. benefit of or other rates; provide any purchasers (j) collecting, means of common carrier cir- low desire; culating, any place they exchanging transportation or information con- selling (c) (d) cerning transportation quoting at f. common carrier cement: or charges adjusted equalize pricing; prices dif- be used -as factor in o. b. differently (k) attempting to control the from other or destination ferences prices (e) acquisition mills, use of cement after at delivered located purchaser; plus (1) determining title equivalent common base using any transportation charges classifying or basis carrier custom- ; shipping (m) determining types proj- ers actual purchasers “sys- point, (f) ects or to whom will or sales include, direct; tematically” (n) collecting will not be made common carrier greater circulating exchanging factorsj transportation less statistical produc- data reveal individual actual costs thereof than the tion, stocks, sales, shipments (g) destination, shipping to de- producer; (o) spying upon prices “systematically” in- threaten- livered boycott ing representing to customers who im- factor deal in com- clude ported cement; (p) transportation charges high- determining dis- mon carrier - actually transportation and other terms sale. em- counts the er figures (h) ployed, at destination cost

543 Its by May 1931. by twenty declined to system the to and are referred stationary until membership In remained implementation. Commission as acts of June inaugurated to only campaign 1933 words, the when enjoins not other the order system the Institute obtain members so as multiple make use of a support representative industry order the of the aid or practices but all acts and think, evident, comply sub- N.I.R.A. the system. with the such It so we is proposed al- mission code. Under these the the fails to disclose record circumstances, pro- substantially all cement not il- leged if its use be combination time joined the ducers Institute. sup- At alleged legal, practices acts and complaint in in- of the issuance of the port system immaterial. such become seventy-six proceeding stant there were Moreover, paragraph ap- order 3 of the members, about of the representing 95% respondents in pears against directed to be productive capacity industry. Find- of the thereby ignoring capacity, their individual period ing “During a of about states: conspiracy. charge of combination beginning in November months argu- Commission’s As we understand partial self-government when ce- ment, “Para- It so concedes. industry ment authorized under applicable graph is its nature Recovery terms Industrial National petitioners respective corporate [re- Act, repository the Institute was the of the practice spondents], which to the but to authority delegated through its control by all recreate extent used would effect Authority Code controlled ad- in mak- and have same effect ministration Cement In- of the Code If con- identical.” our * * dustry correct, paragraph struction of this charge means of combination Has the Commission Found the Com- pretense get "little more than all the Alleged Complaint. bination in Its industry, leaders and fol- members of the alike, proceeding brings highly lowers into the same us controverted Further, para- before same court. findings issue as to whether 'the sustain the graph prohibit individual re- charge alleged each of combination in the com- spondent plaint even absorbing therefore the order under re- though in good done faith to meet an Closely view. related is the further issue equally competitor. findings, of a low That though whether even purpose sufficient, supported the Commission’s effect are substantial evi- response In conceded. to criticism directed dence. connection with the combination paragraph by at this charged important keep Com- it is in mind that longer mission case will have been upon states: “This no relies petitioners’ [respond- litigated in vain existing combination eight 'if “for more than prevail subject, years past,” even on this last views but a combination ents’] though provisions inception August order were which had its when the organized. stand.” Institute was As al- ready noted, findings extremely are Institute. Cement lengthy, might complicated, and we add comprehend. (hereinafter Institute difficult to is asserted by respondents Institute) voluntary findings is a reasserted ferred vague, ambiguous, indefinite, unincorporated uncertain, trade association. It was August organized fourteen no ce- combination producers upon, many ment located the-northeastern relied and further that by findings predicated upon the United States. found incompetent As Commission, purpose pro- testimony. especially emphasized was the It is many mutual interests of motion of the its mem- that assuming bers, charged through found, and it has functioned combination have been trustees, officers, committees, and other there is discloses how or membership agents. forty Its increased to in what manner became or were mem- membership long bers After a study had thereof. careful June definitely Neither do think member- we that mere very situation, are we the ship Institute, especially the in view crit- merit the much view there the large'majority the fact that a of the instant findings, notwithstand- icism directed the at persuaded by the were or induced to interposed ing vigorous defense the purpose become enabl- members for the Commission. industry cooperate the Fed- the with Commission’s shown, is the already it As government emergency, eral time the chief “the Institute was that the contention slightest creates the inference that them,” the which united common bond members combination were unlawful of. “to membership alone sufficient fact conspiracy. Institute’s responsible for make them strongly upon by the Finding 7(6), relied shown, Institute already program.” As support Commissionin thesis that the of its findings (a)1 organized was employed by the Institute was the vehicle (4a) (3z), (2z), (3a) to (z), (2a) to combination, alleged “When respond- corporate when each fix the dates organized August Institute was already a member. We ent became purposes contained in the statement of mepibers at the be- the number shown pro- articles of association these included and decline the increase ginning, well as ’as visions : membership up to time in such adopt promulgate “To a Code what has complaint. From filing government Ethics of the members. that of for shown, definitely appears when the members respondents who were “To maintain all such law- establish and never filed, thirty-nine had complaint was usages customs and trade [italics ours] ful period, N.I.R.A. prior to the been members proteсtion of the .members as the for at been members fifty-nine not had Institute deem advisable. years thereto. prior two least multiple basing-point “The delivered- findings predicated price system are was one of the ‘customs and Numerous of usages’ of the Insti- upon activities to be maintained.” statements and during the N.I.R.A. tute and its members In- Commission contends that the hap- testimony period, what well as express purpose “maintain stitute prior industry long pened usages” all such lawful trade customs and Institute, now referred organization actually multiple embraced and made testimony, together background to as system basing point price part pror testimony respondents other with certain gram. palpa- We contention is think such incompetent. of this al- Some challenge as bly untenable. If lawful at was upon testimony leged incompetent time, everybody as the Institute and least, predicated findings, thought else for matter reason subsequently will be considered. Cement case which the decision the old only previous- years been decided a few had “Only by Commission states: ly, language was then it included member was un an individual evidence that however, quoted. If, unlawful, there objectives being pur were of what aware certainly can inference from lan- be no Institute, that his own sued quoted express pur- guage that was the practice completely at policy pose maintain Institute it. objective, with can variance Finding 7(o) by quoting particular continues any ground for contention adopted by Institute, the Code of Ethics petitioners [respondents] were corporate beginning partners which effect until found have been properly period. One of the N.I.R.A. Code declara- a novel and the others.” tion from Code labels as an unfair be followed the estab rule dangerous practice ship- diversion conspiracy. place carload trade lishment of a original cement from their charged prove ments of des- one the burden purpose tination to some a member. The assertion he was not purchaser authority, enabling the to obtain cement so far as supported is not , aware, rejected. less than market must any industry generally from tice of the or delivery. statements Other of final respond- any pricing practice policy or provisions to do with the Code have changed by or developed ent was the sale or in a contract be included should through membership or in the Institute cement, recommendation and a Most any or Institute. through act of destination specific f.o.b. prices made important perhaps that there of all in the Finding 7(p) relates or destinations. had or no either finding that the Institute with the in connection main activities any power authority could exercised or multiple or bas- “The N.R.A., and concludes: impose or any con- did restriction system was delivered-price ing-point of its members. during NRA activities operation tinued full period.” Code Findings 5 what and 6 to with have do background is now asserted testi- recommenda- 12(c) refers to a Finding ,mony. former, that the stated freight allow- no tion the Institute that Portland Cement Association American. invoices, re- ances be shown on organized Manufacturers was in 1902 and part of ceipted accepted as freight bills be that in changed 1916its Port- name was on, finding goes payment invoices. The land Cement Association. Between 1907 however, recommendation state several members Associa- respondents. rejected by was tion of American Portland Cement Manu- 8(d) Finding do with rate facturers were also members of the As- published by the Institute order books to sociation of Licensed Cement Manufac- provide freight rate common factors for turers. Pro- Cement Manufacturers pricing purposes. Findings 8(h), (m) and organized tective Association (n) refer to the dissemination Insti shortly remained active until before Finding grant tute of land rates. Supreme decision of the Court in 13(a) refers to the services rendered in the old Cement case. specific in connection with Institute 6(a) pro- Finding states that cement job contracts. detailed discus Without a present have from time ducers sion of these activities of Insti various a strong com- evidenced aversion free found, it tute as to state that sufficient petition “by members have they are sphere legal all within the of a understandings agreements, developed association, trade old held in the uniformity substantial and maintained case. among respect action themselves It is also material to note some of the practically every marketing procedure things the Institute did Except do. not competition.” which involves or other open price filing under the N.R.A. Code goes many out that thereafter, and for three months there practices industry current originated prices exchange or among agreements long years data to 30 through the members the Institute or other- ago. contains this re- then wise, the Institute did not applicable receive from markable statement as members any or send out reports to them respond- situation: “Some instant prices, daily as to either parties substantially otherwise. ents been have Even specific job reports, activities; contract respondents these other have prices were omitted, although participated degree, fully old a lesser Cement case held that time; inclusion of partially periods for shorter such transactions was lawful. The respondents Insti- been fol- mere have tute did receive or lowers, send adopting supporting in- prac- out formation basing points, as to prices, associates; base their more active tices of change of mills from base, non-base to time, or a few have time to vice Even versa. the freight reasons, rate participated only books for various were not limited to practices, rates basing luctantly in some and have points, although under opposed old occasionally particular Cement case for a time they might so limited. group The Com- instances of action.” It will thus be mission does not find pricing prac- that the noted divided into active, classes, Finding 14

four have been demonstrate some who collective action. followers, (c) adopted by and active, pamphlet some mere has to do less awith some 1919, the only participated containing some in some of the P.C.A. in various who practices attempt associa- adopted some of time. No by recommendations classify pertinent is here to tion. It this find- made or elsewhere note that prac- respondents particular “largely ing various states or the the P.C.A. was composed herein,” participated respondents tices in of without which period participation. designation of such are re- which excerpts Finding 15(b) to. ferred contains Finding 6(a) cooperative states that meetings from minutes in of A.A.P.C.M. activity producers among com- cement 1903, 1904, 1911, relating 1910 to over- and in menced with the A.A.P.C.M. 1902 and production resulting in cement lower present Finding continued time. prices. excerpts Finding 17(b) contains 7(i) period during refers of time reports by from in 1915 issued A.A.P.C.M. multiple sys- which the 1919, dealing and P.C.A. in with recommen- quotes tem and from the minutes evolved dealer, dations as to a the definition of meeting of a in A.A.P.C.M. held which is asserted shows concerted action adopted A December 1904. resolution was “began many years ago.” Finding which meeting and statements were made 20(a) meeting refers to a minutes of by representatives pro- certain cement 1904, A.A.P.C.M. in recommendations quoted by Also is a ducers. a statement 1915, the same association in and recom- representative of made Lehigh an as- 1919, by mendations the P.C.A. in concern- 1905, meeting Philadelphia sociation ing the standardization of cement which and also statements made certain is asserted shows “collective action representatives industry. Further, industry.” Finding 20(c) cement contains quoted report extracts are from a made statement made cement manufacturer chairman of the committee trade and 1904, designed to show cement was Finding from a in 1908. letter written specifica- according “agreed to be sold 7(j) patent litigation relates to certain tions.” which resulted 1906 and decision compromised by which was issuance of pro- Commission contends that a license to certain named manu- cement priety background testimony Finding 7(k) excerpt facturers. from judicial precedents, substantial sustained meeting an A.A.P.C.M. minutes of and cites American Tobacco Co. v. United designed Michigan show certain States, Cir., 93, 147 F.2d which was a agreed mills follow the had fixed conspiracy criminal case. The court held by Lehigh. that historical evidence the relation of corporations Finding 8(b) defendant to the old American states that members of Company, which had been industry preparation Tobacco dis- commenced combination, as an publication special solved unlawful was rate books (147 page 119) F.2d at which was admissible “for continued 1922 in until purpose throwing light upon much subsequently form the same as was offenses, acts, subsequent practices supplied by 8(d) the Institute. Finding defendants, charged” against extracts three contains from letters written any light whether such did in 1916 evidence throw relating to the C.M.P.A. “properly question them Finding 13(c) rate books. contains excerpts reports relating jury.” specific will be noted the defendants job contracts case same A.A.P.C.M. 1915 and of in that were the those con- Finding compаny, P.C.A. in 1919. old 14(b) contains nected with the concerning excerpts background testimony numerous meetings was held 1905, 1906, proceeding In the instant A.A.P.C.M. relat- admissible. quite different. Thirty-one in the main situation conditions sale respondents against present whom agreement to standardize the customs was offered even usages cement trade and certain evidence were not policies, prior Twenty-five to 1916. which it other trade is asserted existence only against in exist- cease and is directed desist present things.” those Between during ence life C.M.P.A. present when the respondents of The Commission accuses inception, asserted to have had beginning using evidence “as the this old during gaps are wide of time continuing conspiracy” basis proof industry offered estop- adjudicata and argument on res trade association were members of con- pel, is, alleged same that is the “it any cooperative activity. Thus engaged in “origin” before spiracy” had its was dis- between when the C.M.P.A. was de- year old Cement case the the August the Institute solved and 1929 when Supreme cided Court. There is the organized, was association there was no basis, however, or accusa- for inference the the relating existence. The to old evidence con- theory tion that of continuous this 1915. A.A.P.C.M. extends no later by respondents. The spiracy was conceived years' be- gap Thus of fourteen indisputably record that was discloses it organization of the tween that time and the promulgated by the and fostered Commis- relating to the Institute. evidence old complaint charged sion. combina- ,1911. prior In the evidence A.L.C.M. is to eight years past.” tion “for last more than relating eighteen a gap to there is of it 2, 1937, complaint July filed and was years prior organization of the In- the to organized August the Institute 1929. stitute. years,” course, placed eight of “More than background Much testimony of this was inception prior organization of its the to Supreme before the Court in the long old the Institute. before was not how Just case, and we know of no unmistakably, reason disclosed. The record shows why it all could not have been however, used if that the was tried the case Commission, deemed material. The in re- theory Commission on the con- the ferring to the successful contention spiracy years origin had its some or 30 industry cement in that states: prior case “That complaint the of filing and that same successfully contention was made operation up it was to that continuous Cement Mfrs. Protective Association v. Moreover, findings time. themselves S.,U. it is but obvious that it would not strongly they indicate the time were that at prevailed had the historical facts proceeding drawn the was still ques- disclosed evidence here theory. on such It when the was Com- tion been before the Court and had it mission’s brief filed in this was court that been relied position Government.” planted upon ground As it first its stated, already some background conspiracy of this alleged originated here testimony court, before was but wheth- in 1929. not, so or ill er it behooves the Commission From what we have said at this late government date to infer that perfectly plain background testi incompetent counsel that time was so as mony purpose “for was used of upon rely fail either to offer evidence throwing upon light subsequent of material to case. The its Commission also fenses, practices acts, charged,” but every op- “Petitioners thus had that was used as of the foundation portunity meet this long evidence before upon which the of combination was * * they closed their defense We predicated. accuracy doubt assertion in findings view fact some of We now come to testimony based hearing respondents’ years, during

antedated 35 or 40 activities the N.R.A. May 27, period it is a event lame excuse for Code from 1933 to 1935. sought shown, Again already now to be use made it. the Institute As was trade applied the Commission reiterates: “The association that con- President spiracy charged Startes, provisions against was the United under the the Institute Recovery members. It is and its what did Act dur- the National Industrial approval existence of the Institute for the of Code June Competition industry. for the constituted Fair order industry relative be- between members respondents corporate Some 57 of the well provisions proposed, as Code those time at that Institute came members of the by representatives made other statements participating express purpose relative with compliance some the formation of subject read all same We have matter. It the contention such Code. ap- appears respondents’ evidence as it activities all evidence pendix anything is the it reveals members Institute and its great opinion which existed divergence N.R.A. preparation and submission industry. members Competi- between of this of Fair proposals for a Code 'many them difficulty that were in- thereto tion amendments persuaded agree proposed terms of what dustry, and all evidence done Code. amendments, in connection with the and as itself the Code fact, agree. They pro- some never did complying with to activities queer conspirators. a lot of by the Code its administration visions and findings incompetent, and that authority, is all this The Commission contends that upon im- predicated such evidence activities Code evidence to their proper. agreements competent show the con- to objectives provision methods “be- tinuity of their This contention arises from fore, period.” exempting during, The certain and after such of N.I.R.A. activi- pro- compliance Commission, respondents’ con- performed referring with to ties evidence, provisions a asserts: “From from the of tention this Act visions of the prop- findings covering logical standpoint preposterous a The it is the anti-trust laws. referring period, to the of standpoint judicial like those osition from the this strongly precedent support.” background, are numerous and re- it Commis- support upon by argues support Commission lied sion con- further rationally combination tention be con- its asserted it cannot charged. protected by refer to few We shall a can tended that be many findings “unanimously come within which a statute unconstitution- held Finding 7(p) pro- a category. recites al this ab initio.” and therefore void proposed posal by the Institute for the Both and the Commission Code, approved, that all was never rely upon support same cases should sold f.o.b. de- be respective contentions, namely Dietz- quotations except the Federal livery gen Trade Commission, v. Federal Co. be land government f.o.b. mill where should Cir., F.2d and United States v. Finding 11(g) grant rates are involved. Co., Socony-Vacuum Oil U.S. Code, provision declaring it recites a 811, 84 1129. do not see L.Ed. We S.Ct. competition by any an unfair method Commission derives comfort how the transportation makes con- agency which court from the decision this Finding rebate or cessions otherwise. price Dietzgen fixing combina- case. The mak- 12(b) provision Code recites a charged in was based tion that case shipments divert a violation to it subsequent inval- happened what destination to another. cement from one The court states idation N.I.R.A. provision Finding 13(f) Code contains (142 page 324) : Commis- F.2d “It [the lating of sale. and conditions terms petitioners complied also found that sion] provision 14(f) contains con- Finding prices from Novem- with N.R.A. Code Finding 17(d) re- cerning discount. cash 1933, May 27, 1935, ber, when the Su- provision having the Code lates to pertinent part preme Court declared buy- various classes dealers do In of the Act unconstitutional. June 20(a) pro- to a Code Finding refers ers. petitioners’ representatives year, the specifications standard vision as agreed again keep met and N.R.A. * cement. * opin- in effect Code agreements goes on ion to recite findings incorpo then Numerous concerning were made correspondence between the Institute rate pasre (142 The court F.2d correspondence structure. authorities, Code period or conspiracy during either pertinent observation: 329) made ** * fix- other time. permitted the N.R.A. " fixing. It is fact, ing. it decreed might Assuming evidence true, to meet allegedly was enacted proper for purpose of “illumination” condition, temporary emergency, but theory seeks same objective so, price even stabilization was its background justify the admission of proceeds opinion and its result.” testimony, certainly admissible for is not after state what was defendant done conspiracy prior purpose showing the Code and thereafter death of subsequent period or a to the N.I.R.A. pro- protected by defendant conspiracy during such continuity of such page (142 F.2d at visions. In a footnote period. indus To members of an hold that ob- pertinent 329), this court another made try perhaps required by can be invited and not- servation: “We convinced that program the government participate in a withstanding unconstitution- fact [the general promise under a welfare ality of Act], the Government doings immunity of their and that evidence prosecute complied estopped to citizens who and activities in connection can therewith * * * because the (cid:127)with N.R.A. codes to hold them for a used by judi- presumably N.R.A. was valid until fraud, perhaps constitute confidence pronouncement cial was declared to be appropriate designa a more would be game * * invalid tion. case, In the Socony were There defendants is a volume of other great evidence charged having engaged in two con- improperly with which assert was buying programs, February certed We considered Commission. shall 1935 any to December inter- go except 1936. The defense into as not further to one posed buying in was not that case that the incident we mention this for the programs gained immunity has, under the N.I. reason that in our but programs judgment, importance R.A. rather that were exaggerated be- yond part undertaken and carried knowl- (r) out with A reason. 7 acquiescence edge predicated officers and a 21 (f) are government charged responsibility 17, in upon May 1934, a letter dated written Code, Treanor, administration of the that president respondent John proof Riverside, Rader, of those facts should be taken into to B. H. chairman of the in purpose, consideration judge Authority order industry. Code for the cement effect and reasonableness of their portion activities detail We need not the letter program. connection with the buying (r). appears contained in 7 It that Rader short, rejected. That defense In Authority was since chairman of as Code had programs the buying were admittedly negotiation Murray, not been in with Barton W. Code, proof authorized under the Deputy knowl- Administrator of the National Re- acquiescence edge Administration, government covery re- concerning the .gave immunity no quest under the N.I.R.A. provision the latter for a 228, (310 page stated U.S. at permitting court Code S.Ct. cement to be sold to the n 847, page 1129) government L.Ed. : “The offers of Federal on an f. o. b. covering background opera- expressed price. Treanor the view this

tproof Recovery request tion of the National Industrial letter that granted. should be ** * portion Act and the Petroleum Code were finding 21(f) In a of this same excluded, they letter, properly apparently insofar as bore on at some directed of the purpose the nature of the restraint advertising indulged Institute sought point system, end to be attained.” de- quoted If the of the defense “ rely upon were not entitled you fendants follows: think as ‘Do of the ar- during period basing-point system, their activities Code for the guments explanation advanced, they any- what did subse- have thus will we far arouse quently, govern- we think the Commission the in- but derision in and out thing rely upon recently. case not entitled to ? I read what ment them all stant Some happened during period to very ingenious. the Code a clever show of them thority concerning period during the N.R.A. They however: amount discourage provision of the Code under consideration. way in order place, no statement In the it contained free next preserve monopolistic practices expression clearly and of fact but was sheer bunk competition, This is etc. question that opinion writer truth is hypocrisy ours]. [italics serious, hard- legal factual. It could was more can course —and there be ly as an act or statement unless this classified our case spectable discussion of industry perpetuation of execution is an acknowledged ours —that even conceded one was though it be free cannot stand others above all re- existence. systematically competition, must ” ** competition or strain be ruined U.S. Bridges Wixon, v. chairman capacity Rader his 135, 2103, 1443, the court 65 S.Ct. 89 L.Ed. on replied letter Authority to this Code proceeding held in an administrative among said May he á person written not statement made feel Authority “The members things: Code inadmissible, party proceeding was a tele- proper they sent the kind page page 1452 and on of 326 U.S. on arbitrary, giv- not It gram. is not S.Ct., of 65 89 L.Ed. stated: “We they for without everything ask pur assume would be admissible copies sent explain Treanor it.” chance poses certainly impeachment. But they who other individuals eight letter to of his (cid:127) criminal would not be admissible recently ap- on a with him associated [Citing case cas evidence. substantive industry’s pub- pointed study group So to allow men to hold would es.] president relations and to the lic testimony convicted unsworn witness in that participating who also P.C.A. practice counter to the es—a which runs by Treanor or Rader sent work. sys notions legal of on which our fairness of the twenty-two members tem pertinent obser is founded.” Another ' The the Institute.

board of of trustees vation found in v. Inter is United States relation of the states: “The Commission 693, Company, national Harvester 274 U.S. system of basing Institute to the 748, 752, 47 S.Ct. L.Ed. where price competition was never system to the plain the court it is entirely stated: “But by frankly stated clearly more report— that to statements this treat the Treanor, the of trustees of the one John parte upon investigation an based ex president peti- the and at time Institute in the manner set formulated hereinabove quotes Riverside.” tioner constituting in forth —as sub themselves let- Treanor’s phrase from in its brief the upon the questions stantive evidence ter, hypocrisy,” on at least bunk and “sheer involved, fact violates fundament here the It commences different occasions. twelve entitling parties al rules of evidence thesis. on that brief and concludes fact, upon hearsay, not trial issues prior died to the hear Treanor had persons having testimony but offered, his letter was coun ing. At the time facts, knowledge first-hand are who arguing its ad sel for the Commission produced subject as witnesses and are part missibility “It is a acts stated: If test of cross-examination.” Treanor Authority of industry, Code of the of the had living been called as witness Institute, industry, Commission, we think he not would official; high man which this was permitted express opinion been have merely personal expres is that it his argue this We know rea contained in no letter. course, everybody’s expression is sion —of why its competency son be enhanced frequently goes beyond it personal, but writing the fact that it was recorded responsibility and makes his as personal hearing prior to and his long death. responsible, engaged if is with he sociates finding labeled have We activity.” We think the them in common case, the Commission’s which we place, heart of incompetent. In the first was letter in detail. consider At official of this to an the Code Au- afterward written it was points.” we Again refer it in connection with are ‍​​‌‌​​​​​‌​​‌​​​​‌​‌​​‌​‌​​‌​‌‌​‌​‌​​​‌‌​​​‌​‌‌‌‍left we in the dark alleged. bearing upon the cоmbination used so- this hypothetical system called contains a illustration elaborate prices, zone operation involved. pricing system it is evident that finding this such equally respondents Finding is “It did 7(h) system alleged not use formula, put opera- complaint. plain Again, once into 7(n) states: “The tion, self-perpetuating multiple sense that basing-point delivered-price sys- understandings are tem agreements renewed was Washington extended western not needed to maintain identical delivered in 1931. Its introduction there followed period over an indefinite time.” war which commenced two when finding So new began informed are mills operating territory, in that point price system multiple one 1928 and other in and was “self-perpetuating” un- and that “renewed leasing approximately coincident with derstandings agreements not need- one by Superior of these new mills Port- Certainly ed.” of the land.” It is to noted agreement combination or asserted. here does not system disclose whom the any significance it Washington If when extended to pur- or for what organized pose, by which, any, Institute was 1929 was respond- agreement unnecessary or un- ents was Certainly used. there is not system derstanding because the which had even system inference that was used long prior industry either in Washington use or in California self-perpetuating. time was This find- connection with combination or con- ing, furnishing support spiracy. rather than for the alleged combination, recog- reality a The entire findings permeated respondents’ nition of contention terms, uncertain and indefinite 8(b) prac- pricing one the trade “some of present respondents,” 8(g) long industry tices followed in the and that “by corporate most of respondents,” it was continued after without com- (i) “respondents particular interested in bination, agreement. conspiracy or bids,” “groups 8(i) con- bid,” cerned in the “certain same 8(o) Finding 7(h) continues: “This spondents on Coast,” 12(c) Pacific put oper- evolved and formula was into exceptions respondents “with fewa did not ation at stroke. It came one into existence require,” continue to “a 13(d) number of application and its territorial was extended corporate respondents,” the 13(g) of “one from time to time of result under- as corporate respondents,” 15(b) “a num- standings agreements and among cement respondents ber herein,” “some 15(c) By manufacturers.” whom such “under- corporate herein,” 50 of respondents standings agreements” and had is 15(f) “among many respondents,” 15(g) disclosed, it finding but is evident that the respondents,” “A 15(i) “Some few mem- long prior refers to manufacturers Institute,” of “by bers 17(e) of various follows, to 1929 for the there reason corporate respondents,” 19(a) “corpor- finding 7(h), (i), (j), (k) and (1) ate who sell cement some documentary of and other recitation evi- larger seaport cities,” of and 19(b) designed system dence show how the respondents.” “participating originated practiced and from 1901 to Finding Up finding there is 7(m) 1915. states: “In southern this of no charged. Commission, basing-point system pric- of combination California the by system places chief ing however, is modified an elaborate reliance in this applicable respect prices upon findings Finding 22 and certain 26. zone * areas. * * opinion upon points testimony The limited number of is based who possible made makes economists are for numerous which it testified sales application publish, proceedings respondent concerning and each each complete price principles showing lists and economics published, theories prices substantially hypothetical all Commis- delivery situations. following multiple

sion statement from maintain their basing-point stresses de- 22(c) livered-price system sale finding : “When —as in the and and de- obstruct by competition the sell- cement —the is established feat form of which threat- er, price leadership governing ens or tends to threaten the continued use accepted and and by base is sellers maintenance of said and buyers and bargaining uniformity prices there is no between created and main- sellers, true requirements of a fundamental tained its use.” lacking, market in the economic sense argued by It of market the result are not finding combination, no it action a true sense but mere- economic only has reference to the “effect of expressions noncompetitive or mon- ly of a respond combination maintained opolistic price structure.” ents.” We think is merit to this criti comprehend why cism. It difficult to find afterward discuss We neglected failed Commission make uniformity connection with forthright finding combination delivery prices. point, it suffi At charged, together findings which judgment cient to observe our would disclose no how uncertain terms prove proves neither the com nor tends respond and in what manner each alleged. Perhaps treat bination it could be Assuming, became member sys ents thereof. basing point ed as indictment however, ais of combina finding tem, even not show so the does tion, reading predicated it is discloses by conspiracy that such in contrast use was upon performed practices "the acts Furthermore, to individual we are action. thereunder in connection therewith actual the view that in the absence of respondents, said out herein.” circumstantial, set proof, fact direct means, com think, so we that the charged combination cannot shown be, predicated bination, opinion evidence. Minnesota Rate which, many previous findings, 352, (Simpon Shepard), 230 U.S. Cases v. shown, applicable to 465, 1511, L.R.A., heretofore 729, L.Ed. S.Ct. naming respondents without N.S., 1151, some of the 18; The Ann.Cas.l916A, Mis predicated must them. It also Chicago, souri (Knox Rate v. B. & Cases background testi upon findings 507, Q. 474, based Co.), R. 33 S.Ct. 230 U.S. rel findings testimony mony, upon based on 1571; 57 L.Ed. Baltimore period, upon other 349, ative to the N.I.R.A. States, v. United 298 U.S. Ohio R. Co. incompetent. to be testimony we hold 1209. 56 S.Ct. 80 L.Ed. course, knowing, of way We have Finding long the last of the 26 is incompetent testi the extent complicated findings made the Commis- into ultimate mony findings entered “The con- sion. played finding, it is evident that but and from the record cludes evidence of part. no small capacity, tendency, finds that the therefore apparently recognizes The Commission and of the combination maintained effect finding of a of its combina- the weakness herein in manner the the general find- “Besidеs the practices per- tion and states: acts aforesaid and the and ing from Par- quoted above of combination connection thereunder and in there- formed Twenty-six the Twenty-two herein, agraphs and respondents, out with said as set petitioners findings applicable all restrain, to hinder, lessen, and and has been findings in are similar suppress competition [respondents], in sale and the and * * applicable to some following paragraphs *; de- of cement distribution petitioners [respondents] alt cement, private or prive purchasers [italics both * * capacity in their collective governmental, of the benefits com- and ours] thirty some from extracts price; systematically main- Then follow petition pages of three findings, covering more than monopolistic and and methods tain artificial which, Com- brief as the of cement Commission’s prices in sale and distribution * * * states, applicable “to some or and promote and otherwise mission might what findings as to find- voluminous Such petitioners [respondents].” all conspiracy overt in the law form termed opinion acts our ings, however, cannot in combin- finding of predicated and its find- then found the basis for the combination acts. upon such overt is ation or findings it many of such 26. In horse. placed petition- It before the cart plainly that some of disclosed others pursuing were one course ers ordinary proceeding we If were an fact, the Com- opposite directly course. it to the Commission would return seriously contend not mission does purpose findings if it could' revising its applicable “to some findings innumerable light of what we have and so desired form petitioners [respondents]” all However, we are confronted with said. general finding of combina- basis for the extraordinary might what be termed an position original tion but revert to their observed, it will soon already situation. As alone membership in Institute years proceeding in- be ten since was that such “We submit sufficient. states: all, basing It status of the itiated. After alone, would, it stood membership though point price system to be is not determined responsible for the acts make them all merely It in- the factual situation. (cid:127) joint policies the Institute as question ultimately, law volves “After argument agent.” The continues: better, sooner must be decided voluntary with the combination affiliation Supreme by the think the case Court. We through Institute, membership up way should be not down. apprised purpose of its having after shall not it to For this reason we return point system basing to maintain the proceed but shall decide the Commission outlined, participated each has above legal involved. issues through pric- own combination use of a ing system consonant with that The Heart of Case. the Commission’s formed and which it has the Institute was case, up- The heart of the Commission’s preserve.” If the Commis- undertaken fall, is embodied on which it must stand thought membership in the Insti- sion consider finding which we shall alone, in tute connection use a preface some to such consid- detail. As point system, sufficient eration, material to have mind cer- it is finding of could be which a combination important dispute: facts tain question naturally predicated, arises overwhelming testimony is why not .made. We 1. such sustained, buyers pay cement will not more for could be doubt cement than for another. immaterial. brand of whether not is now one so product. com- interchangeable argues: further “We finding 9(a) plaint recognizes, states: so after submit that the Commission had de- “ * * * as small as difference petitioners all the [respondents] cided rhat per may divert business barrel one cent participants parties com- to another.” one seller proper to treat the declara- bination it was exchange of infor- respective petitioners 2. There tions and acts of either mation between declarations and acts [respondents] through Institute or otherwise. Find- ignore in its conclusions “Except extent ing 9(e) nice between the exact nature distinctions prices delivered dur- respective the dissemination of degree participa- of their period some seven- NRA Code perhaps ing sound tions.” a This necessarily carried with- predicated upon thereafter argument if it months were what prices, exchange except of base way happened. course, have no it an Of of among exchanges certain direct knowing point the de- for limited what Commission at the record respondents does not respondents parties which that cided all the auspices under the except by to have made as disclosed show to the combination shown, system- no already Institute, made there has been findings. As of the its corporate re- exchange atic among equally order to low meet spondents changes price prices competitor or of basing-point talks invariably prices.” always about “shrinking” mill nets. It speaks “system” “formula” proof 3. Likewise, there is no prices never a pricing, “method” any exchange of information or always at de- of destination are agreement respondents concerning among scribed “identical” “uni- rather than f.o.b. mill. form.” 4. Information concerning is ob- Finding 7(a) “Substantially states: all by respondents respective tained by corporate respond- cement sales of Finding 9(e) customers and salesmen. ents made delivered on the of a basis corporate respondent states: “When a is, price; a price at determined change written price, base makes its n delivery location which actual reflecting delivered-price quotations this purchaser.” cement is It made change usually sent all customers. pertinent to note this in connection with through Through customers and common sales statement are thus made because field, concern- salesmen information invariably market for cement is at the respond- ing change reaches the other this buyer’s destination; is, dealers in that area almost im- selling ents cement whom the Commission characterizes as mediately.” “backbone” of the insist on know- business through 5. agreement either There is will how much cost delivered. whether the Insfitute otherwise as to purchasers of generally also true respondent operate shall base or non-base cement, including governmental agencies. number Finding “The 7(b) mill. result it is sold on basis That this as a identity of mills and non-base base buyer conceded demand mill time to time. A change from base oral counsel the Commission on may, management considers for reasons argument. mill, sufficient, and, a non-base sim- become base ilarly, a become a non-base 7(a) determining “In Finding continues: mill.” charged will be delivered location, any given respond- cement purchasers 6. Dealers multiple basing-point system.” use a ents agencies, including governmental thereof, many findings, the term “re- Like their desire are almost unanimous in spondents” and uncertain. indefinite purchase at the a basis cost not include all the cor- Evidently does of destination. fact, respondents. most porate agreement 7. There is no deny that Pacific Coast respondents refusal sell at among system pricing. As have ever used price. plant an f.o.b. shown, the concedes already perhaps pertin- interesting and It is also system used some these euphonical em- certain words note ent to “is modified Pacific Coast invariably by the Commission. ployed system prices ap- of zone an elaborate “match” for “meet.” employs the word certain areas.” plicable in Commission at- importance formula Finding 7(a) continues: “The prices” rather “matching to this taches operative to make used prices” “meeting of is illustrated than shall be price at location brief it uses the for- the fact price plus of base combination lowest thirty-seven fewer phrase not mer A Thus, if Mill has a base freight. all-rail purpose is obvious times. barrel, its delivered per price of Supreme language $1.50 light of where it cement will location sells each and that case the old Cement Court plus ail-rail per barrel Clayton Act 2(b) $1.50 in Sec. contained delivery, ex- to the its mill from word is favorite Another as amended. delivery sale is made when cept “absorbing” speaks of It seldom “shrink.”

555' “At .that of and not denied combination which the a location at iu testimony taking of the close of the from freight an- plus price all-rail the base 29, 1940 this case November on Mill A uses figure, mill a lower other is plants packing and 15 138 cement mills its delivered so combination lower Pacific operating in the area east same will be such location price at mills, 15 these, base At Of 96 were Coast. mill. the other price of delivered mills 16 were packing plants base price of Mill were where the base all locations combination, more of located miles of one within 50 lowest plus A freight is the mill, 112 mills mills. total of the base This at the net Mill A recovers $1.50 thirty plants, base scattered in six packing combination at locations where lower, represents produc- states, of the total mill is another price plus freight of 86% sufficiently capacity Counsel for to tive area.” net its mill AMill shrinks argument oral conceded conditions the Commission Under these equal price. in. which that all mills were base mill net Pacific Coast highest that the obvious it is per mills. A is Mill $1.50 can be recovered nec- it has been where barrel, and sales Finding 7(c) “Having no base states: order mill net essary to shrink its price, a mill quotes non-base and sells ce- mill, of another match the deliverеd prices ment at delivered determined is less the mill recovery its net price plus lowest combination of base freight $1.50.” from base The mill net mills. highly significant highest statement. mill is therefore is a non-base complaint definition the home location and less at all lo- is other contains condemnation, cations the amount of system under from formula mill, delivery put- to the finding just quoted contains and the in the chaser.” definition found While do authoritative has to with will be noted that the formula non-base mills and the fictitious

record. resultant phantom freight, with or ignores mills thus stated non-base included freight and is con- definition phantom oi their resultant formula words, system to base mills. In other under attack. solely fined stated, it com- formula according Finding 7(g) “The following states: plete operative without collection hypothetical illustration of the phantom freight. fictitious pricing Assume described: base A, “Approximately A, of Mill located Finding at Town 7(b) per operated barrel; corporate half of mills base $1.50 C, prices G, same; base and are Mill located Town B, D, base mills. The mills that located at Town known Mill non- is a prices mill; are known have no base as base and that all-rail Neither in this Then rates are as indicated. mills.” non-base it revealed which other is mills several nor towns non-base. Further- nets mills and which the several are base respondent’s more, brief be as shown is asserted below:

Town Town Town Town Town Town Town B D

A E C F G A........ Freight from Mill $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 .. Mill B....... Freight $0.30 $0.20 $0.10 $0.10 $0.20 $0.30 Mill C....... .. Freight $0.60 $0.30 $0.50 $0.40 $0.20 $0.10 price Mill A... $1.50 $1.60 $1.70 $1.80 $1.70 $1.60 Delivered $1.50 B... .. price of Mill $1.60 $1.70 $1.70 $1.50 $1.80 $1.60 Delivered $1.50 price of Mill C... $1.80 $1.70 $1.50 $1.60 $1.70 $1.60 Delivered $1.50 A.......... .. $1.50 $1.50 $1.30 $1.50 $1.50 $1.10 Mill net Mill $0.90 Mill .. $1.20 $1.40 $1.60 $1.80 $1.60 $1.40 B.......... $1.20 Mill net $1.30 $1.50 $1.50 net of Mill C.......... $1.10 $1.50 $1.50” Mill 550 shown, defini- which Commission in its illus-

As illuminates the Commission’s include did not tration pricing formula tion : phantom mill with resultant

a non-base its Mill pr. A—Base $1.50 hypotheti- freight, and but in its fictitious Town A non- B,Mill it includes cal illustration A B from Frt. to 100 to in doubt as base leaves us mill. This pr. B Del. at $1.60 to charged system and found whether B Town complete use of base mills is exist A Frt. from to C formula described the Commission’s as pr. freight C absorption Del. at $1.70 with the resultant com- selling territory where a when C Town advantage freightwise, petitor has an from A D Frt. to necessarily embodies whether pr. D Del. at $1.80 mills, with employment of non-base Mill B—Non-base freight fictitious phantom or collection of D Town territory contiguous to such mills. In G D from to Frt. “Excluding errors Finding 7(h) states: pr. D Del. at $1.80 for- pricing application made in Town E inevitably re- mula, plain it will it is from G E Frt. to for cement identical delivered sult pr. Eat using Del. it. given $1.70 location sellers fornmla, once equally plain is F Town self-perpetuating in put operation, is into G to F Frt. understandings or that renewed sense F pr. at Del. $1.60 maintain agreements not needed to are Mill C—Base pr. $1.50 prices over identical indefinite G Town for- period time. ours.] [Italics put opera- into was not evolved and mula We position shall first consider into existence It came tion at stroke. one Mill A A located and at Town Mill C application extended its territorial and G, Town located at both of which are base result under- from time time as According mills with a base of $1.50. cement agreements standings among and findings, agreement be- manufacturers.” price. tween Mills A and C as to their base formula While this states Each fix such is free to itas see understandings agree- and "a result of B, C, D, E fit. Towns F are located and manufacturers,” among ments A and G and between Towns assume we there were apart. not state that equidistant does freight sup- understandings agreements which 100, and A B to Town Town Town C charged in 200, the instant port 300, 400, D E Town Town inception case, which had 1929. 500, F Town G Con- Town 600. clearly discloses fact, the record versely, the rate from Town G to concedes, any understand- D 200, F É 100, Town to Town Town long had exist- ings agreements B C to Town to Town conspiracy and prior to instant ence D A be- midway to Town Town 600. states, understandings “renewed G, A A ad- so tween Towns The for- not needed.” agreements are freightwise mill vantage from its to all “self-per- operation, mula, put D, A once Town between Town C towns petuating.” advantage from likewise has a Town G between to all towns connec- illustration in hypothetical A Both Mill and Mill C Town desire D. 7(g) shown in the awesome tion table basis; a delivered to sell cement properly simple understood. when becomes compelled fact, virtually simple do. reducing it purpose For cus- the demands insert form this.because easily understood selling when A Towns Mill tomers. own our illustration of point a crude amount a to ob- reduction their net freight B, actual D C and adds equivalent freight which to the CMill does price, and tain delivered F, E absorbed. and selling Towns when at the same equal are on an A Mill C Both Mill and D. Su Under the decision they at Town sell footing freightwise when (see preme old Cement case Court midway the two D D is between because Maple United Flooring also Mfrs. Ass’n v. compelled at to sell them is Each of mills. States, 69 L.Ed. S.Ct. U.S. any D other price or at at same Town employed 1093), pricing this method would town, a difference inasmuch as 1$ com A C not restraint of Mills and is other. one to the from divert business uniform petition, though it results even keep connection, pertinent this it is Neither, price ity at each destination. has been price information that mind decision, fact that to this is the according C A Mill exchanged Mill and between concurrently pricing method they use this Furthermore, (finding is 9(e)). a they engaged that are evidence from claimed that the has received Institute plain de Notwithstanding this conspiracy. or Mill C or Mill A transmitted to either Court, Supreme Commis cision of the any price information information. The Mills now that sion holds activities price which the other each has as competi A C a restraint on and constitute D quoting at Town or other town is Furthermore, unlawful. tion and are field from their obtained salesmen in concurrent contends Commission that their immediately” relayed and “almost to the it is in pricing method and use this 9(e)). respectively. (Finding two mills they engaged that evidence self suppose Commission would not We order conspiracy. its complain up selling activities proposes re to free this commerce point. However, freight AMill this is at midway by erecting a barrier be straint G, disadvantage FE, just at Towns and A requiring C that tween Mills disadvantage as Mill C at a at they only ad each sell in their own C, B Mill A Towns When under- and A. vantage territory. dis shall hereafter We E, G, takes to F sell at finds Towns prices resulting uniformity of cuss the freight advantage that Mill C has a at these pricing, such method at respectively. towns of 10$, 20$ 30$ judg that is sufficient observe in our Conversely, Mill C undertakes when to sell A at ment the fact that Mills C sell A, C, B A it finds Mill Towns the same destinations аdvantage. has a similar these two Thus buyers of cement due to fact competing simple mills are faced with a produced for the cement pay will not more proposition which can be business solved produced C,Mill by Mill A than that ways, in one two individual as their vice versa. judgment Each confine can dictate. know what interesting would territory sales its in which it has an A position if Mill would be advantage Commission’s extend into can its business only in had to sell Mill C determined territory they If the other. follow advantage territory each had an where course, the former as the Commission According the Commis- order, freightwise. require would them to do theory, uniformity of action monopoly each will sion’s in its own terri- they were create an inference tory competition will be at On an end. agreement. acting in concert hand, pur- if the other course is made, we having been assume they go territory sued and into the where inference difficulty in they freightwise, have no disadvantage Commission would necessarily A C combina- they and were must which meet competition. they The fact To to restrain enable tion find in order sell. this, which the Commission they them to restraint do absorb amount of discern, by freight freight necessary professes to to enable them to meet effected insignificant absorption, compared find. same neces- impels would result sold sity which them if each requires to do backyard, Commis- from absorbing freight own in order to meet them sion would have do. of the other? And how could prevent either reducing the other from its B,Mill non-base bring Now we a mill doing? net in so D, picture. mill located at Town into the Neither does fact Mill B in the However, system of the is a this exercise of judgment its own saw es tofit formula according to Commission’s tablish a non-base mill D create Town definition, Being lo as heretofore shown. slightest agreement inference of an or midway A where Mill cated Town between concerted action. It must be remembered A G Mill C is located and Town is where that according finding to the Commission’s located, employs it either that a base it discretionary A, with Mills B and Evidently Mill A or it collects Mill C. they Gas whether non- be base should or phantom freight on or fictitious its sales base states, mills. the finding As each D Town other located nearer and all towns do so management “for reasons consid its D A to Town to Towns and G. Un ers sufficient.” (Finding 7(b).) What doubtedly a discrimination this constitutes possibly could be agree the motive against towns is its customers those and ment between these Mill three mills Act, Clayton a 2(a) violation of Sec. B should sell cement on base estab interpreted Supreme Court ask, lished A Again Mills and C? Company Corn Trade Federal Products v. how could A and they Mills C if so desired Commission, 726, 961, 65 324 89 U.S. S.Ct. prevent BMill from establishing itself as 1320, L.Ed. Federal Trade Commission and mill, a pre how they non-base could Staley, 746, 971, v. U.S. S.Ct. it, they desired, vent selling so from pro and the Commission could L.Ed. any management base deter B against engag Mill all others ceed argue mined? selling system To that the ing practice. in a similar used these three mills evidence a is illogical argument most of all The conspiracy may support imagina find in the that of concur the Commission that the tion the fertile mind of some economic proof pricing rent use method is of expert, but based common sense charged, notwithstand wholly realities it is situation ing long the fact method has without anything, merit. If operation industry in the and that it was which we have labeled heart of the present respondents. not initiated As case, in connection Commission’s with the shown, heretofore the Commission found hypothetical dispels any illustration infer self-perpetuating” “is of conspiracy. ence understandings agree that “renewed We use now another illustration taken are not needed.” ments seems obvious brief, respondent’s from a upon a based why respondents was no there reason actually situation disclosed the record. agreement any enter understand should Scores of other like situations could enu- either at the time the commence fact, typical merated. In base mills. ment conspiracy alleged or at Indiana, respondent a Lone Star has subsequent time. Limedale, forty-one base mill located at Continuing hypothetical Indianapolis, with this situa- miles southwest tion, spondent slightest Lehigh how can there be the infer- a mill located at has Mitchell, agreement A ninety-eight ence that had Mills C south of Indi- miles depicted? anapolis, largest to use the How base method could also mill. mar- A, so, prevent territory Mill if it desired to Mill ket for cement in that is Indian- do apolis. coming selling themselves, C from over and in the Both set for mills they right do, territory freight- figure which the former had of $1.60 advantage? conversely, per barrel, And how seek net wise at their prevent noted, doing already Mill C A charge could Mill mills. As no territory C agreement likewise where a or had reference advantage? Moreover, prices. similar how mill could to from Lime- rate prevent Mill A Mill Indianapolis C 29ji, either dale to other Indianapolis market; fact, under Limedale Mitchell so required Commission’s order would advantage. adds its actual Limedale points. do so. Indianapolis as well as to Indianapolis is Thus much fact makes net,” no “varying is no $1.89. There that Mitchell realizes a mill net of $1.60 freight” “freight “phantom absorption,” no territory willing its home to ac- but is “cross-hauling,” as Lime- insofar cept Indianapolis mill net of on its $1.53 mill, how- dale is Mitchell concerned. The This, however, sales. is the inevitable re- ever, Limedale, competitor also de- sult of the desire in of Mitchell to sell Indianapo- participating sirous of big Indianapolis enjoined market. If it to be attempting that lis market. In to realize absorbing from freight in order to reach desire, quickly things (1) it three learns — market, it is reasonable to that think price Indian- quoting a Limedale is production its factory unit cost of its apolis $1.89, (2) salesmen own its considerably Mitchell would be increased penny cannot more sell for even a price and the of cement home custom- to its that, freight (3) rate than fact, ers increased accordingly. In Mitchell Indianapolis (70 from Mitchell is 360 Indianapolis without the might market compe- more than the rate its Limedale operate. be able to Thus the Commission’s titor). solicitude for Mitchell’s home customers Mitchell, problem, confronted with this probability would result to their detri- do things stay can one of two out — ment. Indianapolis go into the market market Mitchell, Limedale other base like all price Limedale, and meet delivered rail, ship by mills which any do not collect course, might which is Of Mitchell $1.89. Limedale, phantom freight. like Mitchell quote a penny or less more than Limedale and like all others who on their sell own but as soon as Limedale learned of this rail, ship by freight base and absorbs when Indianapolis, from its salesmen in going freight disadvantage territory into might day be likely but more next price in order to meet the which it there hour, compelled next it be lower hypothetical As finds. we asked in the sit- price so as to meet that Mitchell. uation, ask, again how can this situation price The delivered of these two mills Mitchell, as it relates to Limedale and Indianapolis would still be same as it occupy situation, others who a like be before, except was aon lower Mitch- level. conspiracy? evidence of either How can ell, upon learning of Limedale’s delivered Mitchell, desires, Limedale or if either so price Indianapolis, might ignore so- prevent the other pricing does? point system by merely called meet- suppose they And could—would that price. Limedale’s Exactly the same re- competition? aid to or a restraint We however, sult, by any would follow because question think the answers itself. pricing employed method Mitchell would That heart of the Commission’s case by still confronted the hard fact that its in finding is contained 7 charge as to the Indianapolis rate more than 70 2 in count as well count of the com- that of So Limedale. whatever method plaint exemplified by is further finding 23 price Mitchell uses to meet Limedale’s (a) multiple “The basing- Indianapolis it would as its mill net delivered-price used course, per Of Mitchell absorbs $1.53. corporate in the sale why of ce- barrel, but do it? The Com- does discriminatory ment is * * * says competition, pricing. to restrain method of mission when hypothetical plain illustration set fact is that it couldn’t sell in the Indianapolis doing (g) Paragraph market without so. If out subsection Seven only plant types Mitchell was discriminatory price located near In- indicates the dianapolis, could and systematically no doubt would in- which are exact- differences respondent in its clude delivered each actual in order that match ed According freight. delivered the Commission’s the of other contention, stay point.” repeats Mitchell given should out of shown, illustration, prices hypothetical net heretofore the deci- been laid rest Supreme between base existing Corn as to situation sions Court in the Mill so A C B. Products do not Staley Mills and non-base cases. We “Each mill shrinks its understand. do from those continues: We understand necessary for it to decisions product mill net the amount that when a is sold pur- ship- match the delivered established other than the actual base system.” phantom pricing freight thereby ment and suant aforesaid collect- ed, perhaps high sounding language, violation of the discrimination in Clayton Certainly thinking, but consistent with economic Act results. the court reality it those did not nothing means more or less decisions hold absorption fact, discriminatory; each mill net reducеs question open. necessary expressly meet the left amount enable it to case, competitor (324 terri- Corn of a Products the court stated page 735, disadvantage freight- tory page U.S. at S.Ct. at where it is at a realistically 1320): have no To the is L.Ed. “We occasion state situation wise. cause; basing system point decide of no benefit whether a such Commission’s .in permissible fact, brings Com- that in case as the situation so stated Clayton Act, pro- under in only with what was view of mission in conflict not 2(b), permitting of in but visions said in Cement case reductions § and held the old price competitor’s Clayton equal- which in order to meet a 2(b) with Act Sec. ly price.” provides, low nothing contained “that herein prima prevent rebutting shall a seller case, The decision in the Corn Products by showing his thus made facie that case in sustaining theory of Commission’s * ** good price made in lower was discrimination, predicated upon the was price equally low of a faith meet an company charged fact that the and collect-' * * competitor freight irrespective Chicago ed of from course, question presents the as Of product shipped whether its from there was freight to whether absorbed “in been plant or from other at Kansas its located good hypothet- faith.” the Commission’s City. We every have reason think slight- we cannot see the ical illustration freight charged only been from the had imputing Mill est for reason either base point shipment of have decision would good A C other faith in ab- or This borne different. out sorbing necessary freight in as was case, Staley de- statement in the which was price to meet the the other. order of cided Prod- same date as the Corn imperative each was these do of mills case, (324 ucts wherein the stated court they territory so if were to sell in the where page 750, page U.S. at S.Ct. at and, freight advantage the other had a 1338): L.Ed. “As hold the Corn already pointed out, of could them neither Refining Company Products case with prevented doing. other from so spect system, price ato like discriminations Commission, however, by order its necessarily price where involved enjoin doing A from Mills C so point from is distant of would, judgment, our eliminate or production. because, ‍​​‌‌​​​​​‌​​‌​​​​‌​‌​​‌​‌​​‌​‌‌​‌​‌​​​‌‌​​​‌​‌‌‌‍respond- This proviso nullify rate contained in case, upon ship- ents’ the delivered Clayton 2(b) of Act. The Com- Sec. usually ments Decatur include recognizes evidently precarious mission its phantom freight item of unearned respect, situation accounts no require absorption freight of continuously fact that doubt for the uses consequent variations the' seller’s net “match” rather than word “meet.” prices.” factory court holds this prohibited brief, discrimination The Commission without be a Sec. question decision, making (a). real any distinction how- between base and ever, Staley mills whether non-base no distinction entitled therefore freight absorption 2(b) reason phantom the benefit of Sec. between adopted pricing freight, contention bold state- or fictitious makes the illegality system of Products in ment that the variation in mill Corn order meet price, may sellers, by doing, U.S. tors’ (324 or that so stated competition. The court price 89 L.Ed. not maintain a uniform delivered page page S.Ct. at points Refining all delivery, for in that 1338): the Corn Products “In event sys- price.” no price discrimination Company hold that case we part in- competitor respondents’ tem Thus recognized the court that a seller discriminations, price volves unlawful good absorb when done enter differentials the extent faith to equally meet low a result computation price, into competitor, though even deliv- a uniform basing point of a of the selection as a points delivery might ered at all production place distant remedy against result. That invoked per- shipment.” seems make Staley may B appropriate against Mill solely con- fectly court was clear hypothetical illustra- Commission’s system pricing predicated with a cerned application tion furnishes basis basing point than that the_ remedy C, against same AMills shipment. actual against any occupy- who a like basing point own status. Staley had no of its discriminatory utilized Multiple Basing What Is a Point re which the court held Corn Products System Pricing? good claim that it did so “in futed equally low suppose

'faith” to meet an We every unlawful .con- competitor. spiracy The court made this subject the further matter thereof must at pertinent (324 page stage observation U.S. some proceeding, at of in the the either page 976, 1338) charge otherwise, : 65 S.Ct. at 89 L.Ed. be described. The complaint say good sys- “We cannot that a in seller contains no definition of the acts adopt of pricing faith when it to clear tem which chooses such Commission a the seeks ly system, to discriminatory pricing findings outlaw. The least at us in doubt leave attempted it to the up system where never as essential set a the elements of non-discriminatory system, which pur forms of giving conspiracy the basis the chasers, charged. who have advantage the natural plant, proximity advantages its the dispel brief Commission’s not does they expect pur entitled to over

which but rather increases the doubt to what at a chasers distance.” respondents agreed the to do result as a Staley, conspiracy charged. B Again like Mill Com- Commission’s hypothetical illustration, mission fails to take a product sold clear-cut but stand its competitor’s system between merely from a vacillates a which base than rather a base permits absorption own, thereby deprived freight its and home one its requires which the collection phantom customers advantages they freight. states, purchasers were fictitious to over with refer- entitled at a ence to latter: Suppose illogical “While Staley distance. had from sold its oppressive base, by-product condition pe- is a as Mills A own do and C in the Com- hypothetical [respondents’] point titioners’ basing sys- illustration, adding mission’s tem, it freight also inherent points actual is in it.” We under- the territory phantom stand to mean freight freight it a that advantage where had is ab- inseparable part sorbing system freight necessary competi- con- meet places demned. This tion in other Commission territories. court in a its position opinion awkward nothing rather view of said which even indicates (b)7 each mill that free to that such is be or not to Staley аction would abe mill “for discriminatory. manage- non-base reasons fact, its ment considers sufficient.” purpose court As already disclaimed such when it shown, comparatively (324 respondents few page 757, U.S. stated S.Ct. page from mill 1338): phan- sell a L.Ed. “But non-base it not collect does respondents freight. Suppose may respondents follow that tom all of never absorb mills, freight they factory price might when their plus base be in ex- ac- freight higher independent is judgment, tual of their ercise competi- would their mill to system of which they using system require a base be not then does Notwithstanding freight; complains? phantom charge Commission or fictitious fact, charge, permit brief contends it a the Commission not its does it phantom conclusively that is “inherent” element freight the record demonstrates system complaint, counsel charged charged by respondents who in' the not shipment.5 Neither argument, point in re- Commission oral from a of actual sponse system “require mills fact that all of the base conceded does is to and shrink it does Pacific Coast are base mills their mill nets.” What permit absorption freight “I con- phantom freight, collect stated: no tend, later, option it desires I the seller when shall show few minutes freight not phantom freight territory sell it has a where existence basing disadvantage. necessary multiple element in the point, system at all.” ability of The Commission states: “The freight point,” nonbasing point “basing the the its own

Referring term only advantage meaning territory states: to add “It has point requirement correctly implies place basing that the and‘the because shipment basing system if to maintained actual be do so not point.” imposition statement results of fictitious We understand this freight.” phantom No system charges mean so-called non-basing point doubt dhe mill has innocuous if all sold cement stated, ability accomplish what actual located at the base “re- significant thing shipment, majority of great quirement only be- that it do spondents so” because all could do and which do Commission, a non-base mill in the exercise comes referring so desired. independent judgment own mills, “The maintenance of non-base requirements result of the of a or a petitioners’ sys- [respondents’] basing point competitors. it and between being tem them into calls and demands application nonbasing point wherever mill a be The Commission states: “It should freight to which there is no customers no understood that it difference makes freight or is to which the actual less particular results base the whether freight the factor included in the by delivered mill are each base with without set or price quotation.” system non- How a calls and direct collusion direct collaboration ap- being base “into demands their mills with other with base mills or plication,” in view of con- the Commission’s competitors.” This is a contention born respondent is shown, cession that each to es- necessity for, free heretofore there as or mill a base non-base “for reasons tablish be- agreement no or collusion sufficient,” its management considers we are respondents prices. tween as to base The comprehend. unable to “It Commission continues: mеthod is the pricing produces formula The Commission almost in the next breath price quotations.” identity of delivered “Basing point states: mills are in some- significant appar- This is statement position. system what does different ently means it immaterial whether phantom charge require them or ficti- identity price quotations delivered freight for geographic tious as the reasons * * charged * from resulted system mill does. But nonbase independent action. from require that base shrink their mills mill does they go territory into de- The Commission states: “Petitioners’ nets where as quotations governed by system system- [respondents’] are includes livered phantom point.” imposition basing This is another atic as in another Pittsburgh glucose course, Plus exaggerated contention. Of the the cases.” available shipped spondents There statement. water but with with a two minor A small number water lesser charged transportation exceptions regu rate re lar freight. Also, rate collected rail which was rate, phantom freight. truck thereby certain higher, and collecting charged this means phantom the rail selling in disadvantage is' again appears great so when Here it the Commission competitor’s pre- practically contending territory with their that non-base mills In phantom clude entering that market. freight are essential element from an fact, system would Obviously, how- the advantage disadvantage condemned. ever, artificial, conspiracy charged longer not refer no did natural but effected be system systematic on requirement to a each mill sell “includes imposition phantom price. change f.o.b. mill freight” in view from present respondent system conforming the conceded each had fact that to one absolute determining jumping freedom whether order Commission’s would like frying pan become a mill. into would non-base fire. Commission, referring varying is our view that who have nets, “They their own predi- ego base mill and make a are the alter solely point following basing system cated thereon de- trade identical practice policy price quotations. livered essentially gears different from When in a neatly, predicates mill which mesh that non-base machine we be sure some planned way.” base other than the of someone it that The Su- shipment. preme course, suppose actual Of Court in old Cement failed case policies comprehend two these court could united in this contention. The (268 common pricing page 598, stated but this U.S. at 45 S.Ct. at quire agreement page 1104): to which were to be L.Ed. of bas- “The use * * * points base mills, and which were to appears be non-base not to agreement or an that some agency activity such as the result of collective power the Institute spe- should have the manu- defendants cify the class each mill should be generally, But facturers nor were arbi- in. agreement trarily no such selected. use is rather Their power vested in fact, development the natural Institute. result contrary appears situation Com- within business geographical certain defined mission’s that each mill was free areas. When a manufacturer establishes to make its own his factory given choice to whether production would become a base product or non-base mill. his territory sells in a contiguous freightwise factory, to his Other statements contained in the Com- other mills vicinity established pertinent mission’s brief are to note. One serving territory, the same com- in order to of its favorite themes * * * pete in that territory [italics ours] point system operates nullify the natural must price sell at a mill permit which will advantages disadvantages and of location them to price deliver cement at which a respective the quoting mills when in a will compete them to enable with the mill given territory. The Commission states: or mills located basing point any pricing “Under every kind of method * * assumed, *.” If be Commis- as the naturally mill has a substantial and inher- argues, sion planned that “someone it that advantage ent quoting nearby on when busi- way,” who did the planning? Certainly it competition in real with more ness distant present was not respondents because, By every mills. token mill same a has ' shown the findings noted, heretofore naturally substantial inherent and disad- pricing system long prior had been in use vantage quoting when distant business inception of the conspiracy now competition with mills located nearer charged it “is and self-perpetuating.” appears customer.” This log- to be a question immediately ical statement but the Leadership. Price as to how proposes arises Commission give “naturally effect to this Another system inherent feature the pricing un- advantage” “naturally emphasized greatly and this der attack inherent dis- the Com- advantage.” already we shown, have mission is certain mills recognized As that supreme proposes price to make leaders. The advantage selling territory price mill in the of a course “The base where it is announced advantage, a and to mills. has make Unless its the base these mills are "And 1302, the stated: their base 71 L.Ed. court and price leaders recognized as proper, competitors may into fact see adopted, woven that prices accepted, judgment, competitors, in the of their exercise own price structure manufacturer, prices system. follow of another no there can be * * * suppression com- any base whatever not establish does set Base can mills pres- petition any domination. sinister best, subject show price they think leadership and [Citing United accepted old Cement case.]” ervation of their * * * Jersey, New Standard Oil action. States v. Co. of general wisdom of their D.C., 288, 316, each is that the court stated: F.2d effect situation of this subject base evi- which “While it is of direct area not its base has by dence, yet fairly supreme recognized as such it is inferable price that, by the if the therein.” situation shown evidence competitors do business who finding major companies Socony follow contention is consistent four area, they into do do because so which divides the respond- classes, wish war engage price-cutting “other one of follow- might mere concerned have been entail losses to ents named] [not val- perhaps (including Socony) any compensat- contention is without ers.” While applicable ing theoreticаlly, we think it benefits. Such a view id has sinister that especially aspect, system merely but any pricing business matter impose. Cer- judgment prudence every would which the Commission illustrated in producer competi- tainly community country by each under retail prod- price many cases, which its in all [Citing tors in- lines. determine could be price cluding would sold and such the old Cement uct was be case.]” territory, irrespective supreme in own Involuntary or Punitive Bases. might do think. competitors what its forms Closely price leadership think in all We would that related to great industry, particularly those of concerning the use Commission’s contention sys pricing irrespective magnitude, of involuntary punitive certain bases found employed, respondents. ap- would that tem nearest This is We price proach followers. leaders Commission makes show- suppose the leaders are power further that would enforcement of commanding position, occupy pricing system who Finding those under attack. strength, perhaps producers size and (a) because of their states some “cannot those temptation followers away sist break from the fact, suspect may vitality. be a system in seeking particularly less attractive is, occurred, follower does not business. This de- choice partures such own free probably frequent become of his more position by a into among he is forced followers. main- Successful dominating competitor. perhaps larger system requires, therefore, tenance fact, again we price leaders, also be a sus usually And it larger is, many mills, those pect possess it that in power that instances chain re- force exercising price leader capable system of who calcitrants adhere and that impose upon fortunate com ship power their less necessary. exercised this be when case, however, be we petitors. multiple If such basing-point delivered-price any infer could create not see how this system do has inherent for within itself means conspiracy or action be of ence concerted enforcing producer its observance. One groups, do the two neither can, tween price by putting a base into effect at the upon any bearing pric it how has see producer, absolutely mill of another fix the system under attack. producer, maximum mill net of usual- affecting without the mill fact, may ly net on more been held In it one * * * portion of own business.. leadership than a his of another with- price follow practice, punitive frequently competid.-n. on In bases have imposing out restraint price lower than the base of International Harves- been the seller United States v. * * * 748, imposing Some of Co., them. lead- 274 U.S. S.Ct. tire ter

5G5 did, hesi- action industry have not between A and even if the cement B. But of (cid:127)ers such indulged force adher- inference instrument could not tated to be use against Institute, producers ce- other system used or pricing to the ence findings power require all of which or industry.” are without Then follows in ment prevent they A B acting instanc- either 10(b) as (g) narration certain imposed did. punitive bases have where es thereby. or result achieved effect and the Uniformity of Delivered Price. .Many thus occurred related of the instances The Commission makes much majority of re- when a the fact that points cement is sold the Insti- spondents not members of were destination price identical par tute. ticularly that government bids have We ex- enter discussion need amounts, oftentimes been made in identical respond- planation certain of the offered proof as charged. It combination n ents imposition so-called these be should remembered in this connection significant fact punitive bases. The the combination alleged is the em imposed finding that is no there ployment of basing point price system n as among agreement the re- the result which results in prices. identical delivered spondents through other- Institute We think we have heretofore demonstrated power finding recognizes, this wise. As that the same result would ensue as the re leaders, possessed by price “usually the sult of system pricing and whether used larger mills.” chain individually or in combination. argues that argument The Commission’s imposition punitive bases is inherent spect predicated upon in the main price leadership because “the testimony experts economic given implicit basing point base (cid:127)of mills is response hypothetical questions. We already system.” We shown that testimony have read this and we ad- must leadership any pricing price implicit mit badly us in leaves confused system. inevitably that, exists where state of mind. It one More find- occupy industry ings predicated more members thereon are almost con- as position commanding fusing. because of The Commission does not take illustrate, respondents’ magnitude. issue with strength contention To Mill expert testimony A, up- cannot solely power possesses relied because of the proof on charged. as combination commanding position of its result Commission, however, place imposes does much industry, punitive upon base upon showing reliance it as that the effect B express Mill purpose, we will identity of delivered is a restraint assume, requiring B to sell on a competition. done, satisfactory level to A. This is course, agreement without A between (b) purports Finding 22 to state broad B, agreement because was such an theory outline the .witnesses imposition punitive presented respondents, bases would on the B unnecessary. per unwilling theory other such witnesses hand haps imposed to resist the base presented unable Finding Commission. B A. If desires in business continue (c) states conclusion the Com- recognize choice it has no than to predicated mission this economic that, as determined base becomes “It testimony. A. It states: is concluded price present a what Commission terms follow in pro- in circumstances so, doing it “does any principle er. not recognized establish ceeding, of eco- suppression competition of any uniformity price show of or that tends nomics competition sinister in domination.” In free United States v. result from the case Co., supra, ternational Harvester 274 of article well-in- a sold U.S. standardized 708, 754, page buyers explain 47 at S.Ct. does not serve L.Ed. 1302. formed that, priсes respond- More than of the situation cannot create the identical any offering agreement of of inference sale and sale ents concerted understand, any think phase is a This, is worthless as we

cement.” theory any of eco- stand- Commission’s case. Is recognition there is a there that product price ardized is not es- where nomics contended for as any from tablished uniformity price will result the seller? is there of And that “bargaining buyers sold between sellers” of a article the sale standardized informed product? we are sale of buyers, but well-informed standardized application, pro- not- Can it be that in the of standard theory here without sale is buy- ducts undisputed generally, uniformity that with their of withstanding fact price, one pay bargaining buyers more for will between ers of cement not that in sellers but the sale of cement brand than another. exception recognized? must be Does “There a well- continues: competition mean when eliminated recognized principle of economics producer a price of cement follows the desirability the equal of units of the sale so, leadership of another? If it mean does buyer accept one seller will not less competition ignor- can exist price pat- Under than from another. leadership? ques- We think these* detail, many of tern heretofore set out tions furnish own Further- answers. characteristics respondents’ have the sales more, we think the contained statements ” application ‘dumping.’ of in this finding argumentative are so require each mill to sell principle would inconsistent to little if as entitled price uniform customers at a cement to all any weight a finding as fact. in the preclude variation and would shown, “prin finding recognizes As freight ab- would follow that mill net. ciple uniformity price economics price of sorption, order to meet competition in tends to result from free prohibited, effect competitor, a standardized article sale sold nullify 2(b) Sec. be to of which would buyers,” well-informed but further finds finding continues: Clayton Act. This principle applicable sale is not uniformity price true that “It is also principle of cement. of economics This equally consistent given market only recognized in the old not competition free condition of .with given application. case but The court monopoly.” Having condition with a 605, (268 page stated S.Ct. U.S. uniformity price in a conceded page 1104) great 69 L.Ed. : “A vol consistent with free is as given market given by testimony ume of also dis monopoly, competition do support tinguished economists in logically argued how can be understand that, thesis the case of a standardized competition in the no free there is product fully wholesale informed sold cement, perhaps the most stand- sale professional buyers, dealers of all. product ardized cement, uniformity will inevi tably active, unre result free and however, finding, concludes: government competition; and the strained cement —the the sale of “When —as ‘Undoubtedly in its brief concedes seller, price is established that — approach uni price of cement would leadership governing base market in the absence formity in a normal there is accepted by other sellers and the manufac between of all combinations buyers sellers, fun between bargaining ” case, supra, Staley also See turers.’ true market requirements of a damental page S.Ct. page U.S. at lacking, and are economic sense 1338. 89 L.Ed. of market action are not result merely attempts escape ex sense economic true Commission noncompetitive monopo application pressions of this devastating effect “dealers, shown, theory by arguing that As heretofore recognized structure.” listic industry, the backbone this state who also relies know that informed to enough charged. not well proof the combination ment is not a homo- inability standard perhaps grasp our the so-called Due that there are sub- quoted, product and geneous last statement meaning of the any such quality of stantial in the differences evidence of collusion between sellers any again competition Here the Commission’s that cement.” restraint on was thereby directly contention in conflict with effected. expressed case. views old Pursuing further matter of uniform Furthermore, it view that we are price (the identical), Commission calls it buy- argue on borders the absurd finding 9 number instances describes a pay ers for one of cement will not more groups where made uni- ignor- brand than another because form governmental bids to agencies. Some quality. ance as to its character and of such bids were on made a basis com-

great gov- both of cement is used bulk rates, mercial freight grant others on land agencies ernmental and individuals rates. While Commission contends that buildings, bridges, high- construction of price identical any point delivered ways Is projects of a similar nature. of destination and an price identical bid possibility within realm of deal- government agency is evidence of col- ers, contractors, engineers and others ex- lusion, it that the does not contend infer- be, perienced in the use of cement would ence any to be drawn- is different in one quality unaware of difference in instance than the other. The Commission would make one brand desirable than more reciprocal states: “The character of the another? arbitrary inequitable features system may be seen also from a consider- Commission, however, ation of some high- bids to State finding upon escape made a which this ar way purchasing worthy It is officials. gument predicated. Finding20(h) note that these ordinarily reflect bids general, ordinary purchas “In dealers and prices applicable same that are to dealers quality ers are not aware of differences at the same destinations.” among brands cement sold dif producers. possession ferent of such A illustration striking which the knowledge by groups these would tend typical Commission asserts is concerns bids making impossible respond toward of cement to the submitted 6000 barrels ents to maintain uniform for cement.” Engineer United Office at Tucum States While the Commission refers to find cari, Mexico, 23, 1936, opened April New brief, points at numerous in its it no wherein bid each support. where cites evidence in its per barrel. That these $3.2865854 Respondents none, assert necessarily there and identical bids were the result call our they attention what contend is of collusion more fanciful than real only relevant in the record. evidence when it is further disclosed that the land point suggested grant At the it is shown that govern rate to which the dealer witness testified he was aware from the ment nearest mill was entitled strength per the variations of- different eleven bidders was $1.1865854 of cement but even brands so he would Assuming that barrel. had bidders penny pay a not more one than an- rate, knowledge grant freight land of this suggested other. When it was require agreement it would but spondents proposed to call a nmnber of simple merely application of a formula give dealer who would witnesses similar determine the arithmetic to amount of testimony, counsel for the stip- probably bid would be made “if ulated that dealer witnesses were advantageously most located. the mill And give called their testimony would expected mills if the other obtain circumstances, award, the same effect.” Under the it would be necessary only conclude not we must so, find- doing for them to meet such bid. support ing without perhaps contra- of them some subject. required evidence on to absorb ¡the dicts as would eliminated, anticipated to meet With this enable them is no bid having advantage freight- for the Commission’s contention the one basis that of uniformity uniformity of goy- of a delivered So wise. pay destina- As any already shown, buyers point of will not agency ernment at problem as presents legal more for than an- tion one brand of the same customers, course, true, other. Of price private to it must as the identity of be good producer may asserts, is, Commission fol- that whether a that it does not equally an low but they pay faith meet absorb like less. that would If, price competitor. however, price low one seller of a made a less point selling would others at the same bids In identical connection with these immediately” “almost learn fact of this well as an governmental agencies, compelled price be ac- their reduce point given any selling price identical at cordingly they or abandon If the market. mind, keep destination, well it is in. pursued course, price former shown, Commission as heretofore that point again uniform, that become no ex- there was (9(e)) also that found or, Commission, the language of the between change price information identical. through the Insti- corporate respondents, Furthermore, shown, record Under we think tute circumstances or otherwise. n practice is the common inevitable result of pricing discloses was a that advertising cement must governmental agencies when that sold place provision price bid same at a uniform whether it bids to insert price point be at the production ce- not or that of current exceed government Suppose destination. or- ment at where the Commission’s effective, required agencies der becomes can it be delivery. Governmental doubted plant producers protecting the that the of cement of primarily price concerned located in government for cement same area be uniform?' paying more will producer If any particular persists one price selling for more current others, than the his will time of destination. customers be lost. less, If he sells be com- will others argument on with the iden- connection pelled price their lower to the same prices, tity of delivered level, or forego Further, the business. if following significant statement: makes the they price sell at a uniform will imme- in- “Forty-six petitioner manufacturers create, diately according Commis- to the complaint cluded their answers theory, they sion’s inference that assumptions with ref- a statement of acting in collusion. ascertaining the erence manner of prices but ‘which only not have been Assuming, however, that an iden competitors for de- quoted by his producers group tical bid creates pro- livery destinations’: The at the same collusion, against an inference of whom pursuant long-estab- ducer assumes to be inference directed? To illus competitors usage each of trade his lished trate, suppose government advertises price normally destination will calculate his projects, for bids on three one New process simple he him- the same area, the Midwest, York one in and an usually producer can de- self uses. on A group the Pacific Coast. competitors used prices his termine the an identical on the bid prices calculating their own destination project, New York another group an iden transportation rates by subtracting known project, tical on Midwest still known destination from several group identical another competitor.” any given only project. identity Pacific of bids applies group; members of each which the Commission only answer groups. identity of bids as is no between stated contention thus is: makes to the view such iden applicable Commission’s is description course “This not mills,” tity only bids creates an inference prices of base only to base against group, each the bidders for the reason no answer reality is groups, against all against the three respondents’ majority of mills are great industry. agree. We do not members of the to become such all are free base mills judgment, inference must be In our desire. so .

5G9 rate freight of the of respon- some group to members confined freight books contained railroad which the sible for such bids. shipment to many points of rates from note connection, pertinent to In Finding 8(g) those of destination. Supreme Court opinion of the the recent regularly rate books “The Institute v. and Lekacos in the of Kotteakos cases purposes, di- pricing been for either used Regenbogen v. United States United corpo- by the rectly indirectly, most of States, judgment wherein 66 S.Ct. ’ territory cov- respondents located in rate conspiracy case was of conviction * * by *.” will ered books It the rate num- proof showed a versed because the as is indefinite noted conspiracies than the ber of small rather rate these respondents used to True, conspiracy charged. genеral used never books. is that it was The fact of conspiracy we know but was criminal including all respondents, by many the application reason for the different Pacific Coast. those located the dis- the now under rule insofar as of Institute use concludes: “The court, cussion in com- concerned. The mem- freight rate books was not limited upon menting instructions of the trial the Institute; were bers of the nonmembers court, (page opinion): stated leaflet to, did, purchase permitted rate and some competent “On those instructions it not Institute.” -The record al- books from the only jury the the for that all of find not rate books were the so discloses parties single to a com- defendants were industry to members available plan, design scheme, mon none where public cared who member the by proof, was shown the but also for them same, purchase freight rate also that the impute the each defendant acts industry by the long books had been use others without reference statements the con- alleged the prior beginning to whether to one of related fact, upon. In it was spiracy now relied proven another, schemes to find an important considered in matters one affecting overt act all in conduct which It is also material old Cement case. admittedly only have could some.” affected points basing from which note that the Freight Rate Books. not se- freight calculated were rates were Institute, each member lected by the early part In the opinion of this free use or not use the Institute we practices enumerated certain charged in freight rate service. complaint employed as methods chief criticism directed at these making multiple price sys they failed show the actual books effective, is that tem oftentimes by referred to n Commission as however, explained, freight rate. This implementation. acts of freight rate on ce- acts, from fact These by methods and as found by Commission, and furnished employed by were ment established groups per pounds. respondents, so much hundred railroads was group some one and some largely by the None, aware, is handled and sold far Cement so another. barrel, preparation of They these books was used all. so in are what are known persons acting under conspiracy Institute overt either the law acts and per hun- materiality depends converted this its direction rate estab per pounds doing to a rate alleged. dred barrel. lishment of the ordinarily of a cent were so, the fractions Inasmuch as we conclude the Com- the rate dropped, so some instances mission has failed to establish unlawful be a fraction of a cent more shown conspiracy charged, appears unneces- a fraction instances cent and in other sary to enter into detailed discussion rate. actual less than the of the methods asserted to have used case, old con- purpose The court making effec- books, Typical rate cerning tive. of such the use of stated methods one 597, 45 S.Ct. at perhaps greatest importance page page (268 U.S. 1104) basing points “Thе standpoint : pub- L.Ed. the Commission was were the Institute rates calculated lication use association, (such corporate respond- selected but were members are also prior the same books ents appearing case), as those charged instant who were published by publi- before the individuals violation Sec. of the Sherman cation rate book. 1-7, ap- association Act. 15 U.S.C.A. note. §§ * * * pears published The the actual rates are just to know the material what cents between omitting charge rates fractions compared of in that case was as points de- points the actual of basing charge the (268 here. The states U. court (268 livery.” continues at The court U.S. at page 592, S. 45 page 587, S.Ct. at 69 L. 598, 589, page at 69 L.Ed. page defendant, 45 1104): S.Ct. Ed. “The activities of however, 1104) order, : “In determine to on which government the bases case price, be to the delivered there must added injunction, may an summarily stated as manufacturer, factory price given the of a government follows: charges The that the point transportation the of cost of to defendants, through the activities of quotation delivery. Prompt of delivered association, prices production control carry ability therefore involves the to of cement within the territorial area served process promptly out of add- the mechanical by several in follow- defendants * * * transpor- cost of ing to price, the mill [describing manner numer- delivery. of tation to Lists point ous upon].” trade activities relied rates, readily freight convenient and in government court “The continues: asserts form, ad- necessary therefore available prices that uniformity and limitation juncts prices quotation delivery production necessary to the results of these not, for cement.” activities of defendants. It does however, or under- charge agreement The Cases. placing defendants standing between production.” on discussion, limitations either previous In we case, charges In in the Commission frequently instant have referred the decision to among hin- “a combination Protective Ass’n. v. United themselves Mfrs. der, lessen, 588, .competi- and restrain States, 586, restrict 45 S.Ct. 69 L.Ed. 268 U.S. respond- price, among in producing tion (referred as the old Cement case * * * case), ents mutual made effective it from the instant distinguish agreement employ, understanding or quotations indulged and have in therefrom. ** * employment of the actual effort makes little point multiple basing what as a is distinguish from the ‍​​‌‌​​​​​‌​​‌​​​​‌​‌​​‌​‌​​‌​‌‌​‌​‌​​​‌‌​​​‌​‌‌‌‍before known that case one system pricing,” which results decision there us but contends that the prices by producers identical quoting had it a wrong, that foisted court delivery any given destination. theory and who seek unsound both from economic may standpoint. valid legal That shown, already we nei- As Supreme argument make Court charge ther nor the instant case hardly place On the other it is here. agree- entered into any that hand, insisted that prices either at the ment fix mill or adjudicata res decision in case is that delivery. combination of the instant situa any rate decisis stare manner, competition in a restrain certain need not discuss or de tion. we We think is, employment multiple If the reasoning contention. cide this point system of basing pricing, and the think it applicable, as we decision is charged, prices, on effect repudiate is, accept it. rather than must we system. use from the flows form, length opinion, Supreme we In view summarized Court wrong in detail of facts nothing a review with the use of forego must found case, as the court’s basing point system, well reason- absorption compete what we have hereto- in a dis- ing. In addition order said, territory, though be observed it was even advantage fore resulted against a trade government price, further, action uniform delivered corporate there- members resulting a uniform association system in the manufacture of did not engaged cement from use of such consti- competition under those tute a cases whether there was restraint cision price-fixing among a concerted Sherman scheme Act. sellers, part by accomplished competing subsequent have studied decisions We adoption of a uniform Supreme Court with a view of ascer- system; prohibited .fact, concert of taining holding in the old Ce- whether True, action instant was found.” ment case has been altered modified found, but such case concert of action was dis- think that it has not. It has been predicated largely upon the con- tinguished such cases United States by respondents, current use of the 392, 400, Potteries, v. Trenton 273 U.S. the court the old Cement case S.Ct. 71 L.Ed. A.L.R. thought conspiracy. of was no indication Co., Socony-Vacuum United v. Oil States in case on the court Products the Corn 217, 811, 150, 310 84 U.S. 60 L.Ed. S.Ct. same page Maple “In the Floor- continued: 1129, pres- on was not basis there the ing case, supra, point was single basing the ent agreement in the old Cement case an points production close to most of the of so price important for fixing. A more case variances; in to result trivial perhaps Institute, Sugar is that of Inc. v. in case were the defendants will- 629, 553, States, 297 U.S. 56 United S.Ct. ing basis, to on whenever a f. o. b. mill sell 638, price 80 L.Ed. 859. This another was purchaser requested.” the In the instant so Act, case fixing against under the Sherman case, finding there is no of refusal on the a trade association and its members. While an sell f. o. b. opinion the the discloses that members basis; fact, in record mill the discloses that industry enjoying in lower “sold areas many so. of them did by pay- refineries rates other absorbing part transporta- or page The court on same continued: the charges,” appears tion no fault case, to have supra, “In the defendants the Cement pricing. been found with this method of multiple basing point system, used with emphasis throughout opin- the point pro- court’s basing at or near each upon actually ion “the im- restrictions system, any Under manufac- duction. posed Institute,” through “policing,” the turer, compete territory in order to the in Institute, con- -another, “recommendations of the freightwise closer would absorb observed,” adhere,” “obligation certedly freight, price to make by adjusting his “rigid enforcement,” “steps taken to his delivered as low as that of his shown, adherence.” As heretofore secure competitors. Under the de- in the instant case that no any locality was livered deter- power authority the Institute had or basing point.” mined the nearest Of penal- to enforce recommendations course, Corn Products case the court in the discipline any ize or for failure members called to decide was not whether observance, no Insti- multiple price sys- use anything fixing with tute had do competition, tem was in restraint as is prices. maintenance charged complaint 1 of the in count instant adversely gov- and which it decided brings us a further considera- However, ernment in the old Cement case. case, Products of the Corn tion it is clear that court we think referred Supreme latest decision of Court previous approvingly decisions to its important most relative we think cases, and old Maple Flooring Cement case, presented instant to the issues certainly nothing language there is court has particularly whether quoted otherwise which indicates in- holding the old or retracted modified modify or retract what tention to it had pertinent It is to note that case. held those cases. previously Stone the author Chief the late Justice opinion both cases. noted, As heretofore the issue in the Maple case was Referring Flooring Products whether viola- case Corn case, been shown under 2(a) old Cement court stated had Sec. tion 966, amended page 735, Clayton 65 at Act as page S.Ct. Robin- (324 U.S. at We think it is an 1320) question argu- Act. : “The for de- son-Patman 89 L.Ed. 572 question opinion competitor 2(b) low under

able whether the Sec. author- Act, the of Robinson-Patman ity conclusion need not Commission’s same repeat respect. instant case that a our discussion violation in this said, 2 of the com- certainly argued section in count charged cannot be Commission, plaint prac- In that case shown. that the held such court concerning hand, product illegal. tice On glucose, involved we think page together ap- U.S. at these (324 the court cases taken stated indicate 734, 1320): proval 965, practice. 65 89 L.Ed. page S.Ct. petition- purchasers “The glucose strongly up The Commission also relies competition ers are found on the recent decisions of court they other, are in though even differ- each States Federal United Maltsters Ass’n v. competi- injury ent localities. Commission, Cir., 161, Trade 152 F.2d purchasers in different localities tion & al. and Milk Ice Cream Can Institute et less harmful than Commission, Cir., v. Federal Trade city.” Again (324 stated same the court support F.2d its contention page page

U.S. S.Ct. identical delivered evidence glucose, 1320): a L.Ed. the cost of “Since conspiracy or We need Action. concerted priced candy, principal ingredient low is any not discuss than these decisions further candy Chicago, there at manufacturers less point out that in cases a. to each of those position compete for busi- are in a better charged conspiracy prices fix and was ness, candy located and manufacturers of multiple point price basing found. glucose, producing dis- near other factories system directly in either was not involved point, City, from as Kansas tant words, conspiracy In was. case. other position. in a The conse- less favorable system merely fix and not to use Commission, is, by quence found resulted, uniformity which from candy, were several who manufacturers of in instant case and old City other formerly in Kansas or located Moreover, in those the Commission case. City petitioners’ cities served from Kansas by rely upon done did what was cases not plant, have to Chi- moved their factories place group a certain and one at time and cago.” by group other and some another time conspira support charge place in harmful to com- Thus the discrimination each cases cy. in of those petition purchasers glu- was between the In engaged were in the same activities. all This was wherever located. because cose words, unison. they acting other glucose candy was used manufacturers distinguishable nu are also Those cases candy principal ingredient of which as the ways discuss. necessary merous shipped by sold and such manufac- was parts country. to all In con- turers there is are of the view We therefore case, product in that trast to the involved any of the cases decided subse- nothing in are here concerned with cement which case which quent the old Cement per- largely holding used construction is changes or modifies the way being case, competition Such effected manent structures. no restraint difficult discern how could be basing point price is As system. use instance, pur- competition, between Staley and Corn Products under the shown Chicago and those chasers of cement Clayton Act as its use under the opinions, City. In connection should freight absorption this Kansas remains an it relates kept in mind that discrimination here such question with an indication that open of the same is between customers asserted permissible. is use and not points different be- located at seller considered the record have not We located at the same tween customers purpose ascer- for the proceeding sellers. between those different may wrong meth- with the what taining industry, practices of cement have discussed the Corn ods heretofore We issues for those relevant Staley cases throw other Products (cid:127) may perhaps The record right mill upon the of a base to ab- decision. light practices by methods equally freight in meet the does disclose order to sorb Congress prohib- ous bills some of which are have been introduced instance, seeking time Assuming, that there Countless ited. to outlaw its use. Congression- justification practice spent hearings by no of collect- has been for the committees, as- ing phantom by non-base al whom freight, whether it has been before pages mill which sells and delivers sailed and defended. The shipment, indis- Congressional other than that bear mute but Record charges Congress ships by putable proof which water fact that rate, by mill de- higher rail ille- repeatedly its use refused to declare charges higher rail gal. livers relate this truck occasion to There rate, of Congressional members history. it does not follow that a matter of industry not and never general knowledge. who do common practice case, mеmbers illegal followed such Corn comment- Products court history utilization. of a to effect its legislative some of this shown, practices (324 be other And there stated page U.S. S.Ct. bids, give identical 1320): such as delivered page “We think this L.Ed. of concerted action rise an inference legislative history only that Con- indicates therefor, among responsible but even those gress require fac- f. o. b. unwilling 'to so, cry far combination this is tory all uniform pricing, and to make thus alleged. Undoubtedly the Commis- here price systems basing point against authority proceed sion has the Notwithstanding systems illegal per se.” il- practices are those whose methods and Congressional recognized attitude as authority justifi- legal, affords no Court, Supreme now court proceeding cation for instant directed per urged illegal to hold indiscriminately all the members se, require and be sold on that cement industry, good and bad alike. plant b. f. o. basis. of proceeded study As have with our we judgment, question our case, naturally im- this we have become point price system basing whether magnitude and pressed, only with illegal clearly with- should be declared rests scope possibilities but also with the limitless know no legislative domain. We directed; consequences The Commis- involved. and forcibly and so criticism so often proposes eliminate sale sion’s order courts, as courts, particularly Federal basis, not- on a functions propensity usurping for withstanding desire the almost unanimous system Congress. pricing If this purchasers on the and dealers steadfastly years Congress has over the Instead, require it be so sold. it would although vigor- illegal, refused declare plant cement be sold an f. b. basis. on o. so, ously urged do is to be outlawed now discriminations, Any they are and and courts, high in- mark by the will tide be and com- more numerous calculated usurpation. judicial system plicated here con- than under the Respondents’ to adduce addition- motion contempt demned, will for furnish the basis been has heretofore denied’ al evidence We proceedings are to court. time its renewal at the prejudice without purpose for police made force Such motion hearing on the merits. aof in- directing guarding and members of Dur- again renewed denied. located, dustry highly in a tech- wherever re- pendency petitions complicated nical and field. Before by respondent filed petition view gives an ambitious court its assent such Marquette, alleging that had been de- program, be certain that it is it should right its constitutional to due prived of quired so and the facts. to do the law prej- law because of bias process pre-judg- Furthermore, and its point udice up- A hearing was had issues. industry ment been in use has sought was petition the relief century. There a half has on for almost Marquette by this court. See Ce- diversity opinion among denied a marked Co. Federal Trade Mfg. v. Commis- economists, people general ment lawmakers and Marquette sion, Cir., F.2d 589. 7 147 bad. ly good Numer- as to whether it 574 sought again question to raise the same though I approve do not of' the conclusion hearing reached, the merits certain impress favorably with does me upon amade similar attack earnestness, thoroughness Commission. For the reasons stated the writer’s efforts well frankness as the our opinion, sought former the relief thus displayed. candor he again respond- denied. Certain disposition As to the law governing the ju- ents have also made an attack appeal fortunate in a wealth risdiction of the Commission for the rea- of decisions elaborate discussions son, asserted, 1 so it is that count subjects. I If dealt complaint states cause of action under go astray light it is not because lack Act, Sec. 1 of the Sherman 15 U.S.C.A. § or the precedent. absence of 1, ju- and that the Commission without The following be our decisions must risdiction to enforce such Act. think We guide: we need issue thus not discuss or decide the Cement Manufacturers Ass’n v. United presented. con- Certain other States, 588, 586, 268 45 U.S. S.Ct. 69 L.Ed. juris- tend that the Commission is without 1104; Maple Flooring Ass’n v. United ce- diction as to them because their sales of States, 563, 578, 268 U.S. 45 69 L.Ed. S.Ct. solely ment com- were made intrastate 1093; Corn Trade Products Co. v. Federal pre- Again merce. we think the issue thus Comm., 726, 324 961, 65 U.S. 89 L.Ed. S.Ct. sented need not be discussed or decided. 1320; Staley Federal Trade Comm. v. petitions set review of and to Co., Mfg. 746, 971, 324 65 L. U.S. S.Ct. 89 desist, aside the order to cease and issued 1338; States, Ed. Sugar Institute v. United 17, July the Federal Trade Commission 859; 553, 629, 297 56 U.S. 80 S.Ct. L.Ed. 1943, is here- said order allowed. The also, Socony-Vacuum United Oil States v. aside, and a form de- vacated and set Co., 150, 310 811, U.S. S.Ct. L.Ed. presented

cree con- court in 1129; Corpora- United States v. Masonite formity with the conclusion thus stated. tion, 316 U.S. S.Ct. L.Ed. 1461; Federal Pacific Trade Comm. v. EVANS, Judge (dissenting). Circuit Paper Ass’n, States Trade 273 U.S. agree I am with conclu- unable to S.Ct. 71 L.Ed. 534. majority opinion. sion reached in the court, though Decisions appeal well of this not The instant illustrates Court, by Supreme viewed call at like also limitations of an intermediate court study. Congress though lacking least for Even ours. We receive directions decisions, weight Supreme they Court legislation, in the form of as to the wisdom inquiry. by Its are better understood us for we heard we are to make no them. Their like activity holdings facts field of limited restricted Court, faces, old and familiar pronouncements Supreme seemingly of the once monotonous, Our du- rather tired and but more we must follow. whose decisions agreeable pleasing and ty proceed look into is thus ascertain facts anew, them lapse years: th» after the application of those facts to some with the enacted, light rulings statutes Refining Corn Products Co. v. Federal Supreme Court. and directions of the Comm., Cir., 211; Trade 7 144 F.2d Fed- judicial This limitation of our functions Co., Cir., Staley eral Comm. v. 7 144 Trade simplify seemingly and lessen our 221; F.2d Milk & Ice Cream Can Institute apparently accomplished has not task but Comm., Cir., Federal v. Trade 7 152 F.2d seemingly due obvious. This 478; United States Maltsters Ass’n v. record, to the numerous to the size of the Comm., Cir., Federal Trade 7 152 F.2d counsel, questions great or to the number of 161; Eugene Dietzgen Co. v. Federal raised. which counsel have Comm., Cir., 321; 142 Trade F.2d Fort questions Paper Lack of merit of said Howard Co. v. Federal Trade Comm., 899; prevented presentation has not their 156 F.2d Salt Producers —both length and with zeal. Comm., This is shown Ass’n v. Federal Cir., Trade which, reading my opinion, associates’ F.2d 354. Supreme ig- 6. the absence of review the The “old” Cement cannоt case ex- Court, Insti- opinions Supreme Can nored. not in Milk The Court has tute, recent, Association, it, the pressly more Maltsters overruled strong cases, can Paper carry Fort Neither related cases. Howard somewhat validity I presumption ignore Supreme on Court opinions of soundness and ap- full latest They facts there stated well as the these later cases. are the proval prone our expressions controlling which we are to attach to of the court and are holdings own when Even reversed. when with the reconciling unless it comes to them reversed, ap- always do not lose I earlier case. Cement endeavored peal. holding reconcile the earlier case Cement cases, I with the later with the result questions make presented here Several accept law of holding as the case opinion Eugene Dietzgen Federal v. the Cement case but only as controlled Comm., supra, particularly apropos. Trade the later decisions. A., de- The R. effect of the invalid N. similarity of arise from ductions which Comparative study of later decisions prices, and the contention that opinion Cement indi- earlier case prosecuted for violation cannot be trend, changing attempt- cates a Ibut have Fed- subjected also Act and Anti-Trust ed accept to reconcile and I can them all. proceedings eral Trade accept not do not Cement earlier views thereon there considered our Opinion unqualifiedly, affected expressed. by the later oases. discussion, I state extended Without The clearly distinguisha- instant case is my position the issues involved ble from Opinion, the earlier them. no other reason depriva- charged agree 1. I there has been no the earlier case. alleged process tion due because of the instant proceeding The different under Marquette Ce- Commission. bias of the Clayton Act, charged statutes. here Comm., F. Federal ment Co. v. Trade violated, to be the Robin- amended 2d 589. Act, son-Patman after in the decision “ab- practice 2. believe the I do not Old Cement Case. com- sorption” freight, order to meet proceedings instant involve different instances, il- necessarily, petition, in all agreement An facts. the heart of contend. legal, nor does the Commission so instant absent former case and was in the “phantom” practice charging 3. case. substantial, ille- freight, where least I see inconsistency 7. do gal. all mills finding that whether may choose here challenge Commission’s 4. The mill, they will be a base a non-base agreement utilize lays on the to stress charge agreement of adhere system rather than basing point multiple multiple basing system, nor in basing multiple illegality of the stressing mill, freedom, base to set the mill net if a and its order is corres- per se comprehend charge, I for the base. As illegal to such asserted pondingly limited any producers, it is that selling all when agreement. particular territory, adopt territory’s book, mill net add base impressed strongly with the 5. I am rate, inevitable with result of identical an persuasiveness of inference producers by or unifоrm delivered conspiracy or a combination or agreement particular purchasers territory. to all consistently de- identical drawn be Competition is thus Prices are eliminated. notwithstanding product prices, livered actually Prices are fixed. determined one. Such inference is

is a standard Institute, territory’s base net. The by other and circum- strengthened facts being alleged an teacher in stances, phantom eth- freight, instead ics, instrumentality contributes is an which practice to abandon the points, refusal a monopoly, delivery prices only, predeter- result etc. quoting —a 576 findings all mills fact supplying as to

mined, price by Commission fixed — suppression competition, territory, made serving but it barrel, finding impossible.” are added Or per rates base This contribution also mill net. said Milk & Can Ice Cream itself, but Comm., harmless in Institute et Institute would al. v. Federal Trade use, supra lost when 481], innocent character F.2d how such an [152 “Just information, made, knowingly brought unnatural situation about could be respect from the It differs no industry disclosed. plan members without a (a actor conspiracy where criminal one agreement difficult, impossible, if not plays apparently innocent robber) bank visualize.” role, whole criminal but one which the There was other conspira- evidence of a Murphy enterprise depends. v. United cy to restrain trade. Not was there States, Cir., 285 F. 801. 7 identity in the bids but there was received express purpose and the avowed in evidence a letter from Mr. Treanor John Act, coverage Sherman the Federal officers members on Act, Act, Clayton Trade the Institute’s board and on the associates thus Act Robinson-Patman Authority, respondents’ Code refutes violated. concern of these statutes protestations conspiracy par- and no with the result. ticipation therein Institute respondents. conspiracy C.’s to the other The F. T. of a Mr. Treanor president trade, my opinion, has substan- restrain Riverside and trustee of following support in the tial record. The Institute. statement His was an admission sample party chart of bids is a identical during made support: evidentiary pendency of conspiracy: He wrote: Price Discount [days) of Bid of Bidder per No. Name Barrel Monarch .......... 15 Ash Grove ........ ............ 3.28654 15 Lehigh............ ............ 3.28654 15 Southwestern...... ............ 3.28654 15 Oklahoma ......... ............ 3.28654 15 U. Portland S. C. Co. ........... 3.28654 15 Consolidated ...... 3.28654 ............ Trinity ........... ............ 3.28654 Lone Star......... Universal ......... 3.28654 ............ Colorado .......... by the dif- made eleven “The worst that can said

bids response request companies economic foundation for some 6,000 barrels of cement. bids for discussions ‍​​‌‌​​​​​‌​​‌​​​​‌​‌​​‌​‌​​‌​‌‌​‌​‌​​​‌‌​​​‌​‌‌‌‍making is With frail. were iden- eleven made bids which bidders opinion I am inclined agree, believ- of a cent. tical to the ten-thousandth Could ing that no sound defense of our methods happened times that be coincidence? a made selling can be without the happened Could have without number. competi- admission that some limitation understanding? agreement or without in such necessary industry tion is as subject is cement. This not a which can only.one many is instances chart This presented public through be to the advertis- identity Many of bids. in- showing other way. in ing, argument It is an paragraph in are set forth stances findings. special As we to be made made said has and can be in Commission’s case, suprа, places may be Dietzgen discussing identi- calculated where do to * * *” supports good. evidence some bids, only “The not cal for arguments think you subject “Do ants parties it, are been the point system, we have basing . so by appellate of consideration courts anything advanced, thus will arouse frequently justified far cit- that we not ? government and out ing but derision I refer will authorities. recently. rule, I have read them all Some one attempted where I to state They ingenious. very clever and them are States, Cir., Allen v. 4 F.2d 688. United amount however: we And I' it is the Federal will add that monopo- discourage in order way Trade Commission this court that and not practices preserve com- free listic Congress fact made finder. hy- petition, This is sheer etc. bunk and Conspiracies usually established pocrisy. is there truth course —and circumstantial evidence. do the Seldom serious, respectable can discussion be no offenders solemn written agreements. make acknowledged— case this is unless our may While circumstantial evidence less others above industry ours is persuasive cases, it means in some competition, that cannot stand free lack- necessarily follows that it weak or systematically competition must restrain carrying-power. in conviction be ruined.” instant case are facts not there which are support Further the Commission’s in dispute which leave me free from may be found also evidence doings doubt toas respondents’ refusing which showed purpose and of understanding quote prices save points. at destination price competition. to eliminate standing This accepted alone could be innocent, argued connection Some plan was clearly evidence it Acts apply Anti-Trust sale do competition. proba- eliminate And what is goods. position cannot standard I bly important,— it, adoption accept. more legislation anti-monopoly with the basing points, complete purpose competition of maintaining succeeded in effective competition. elimination competition there standard may Both and significant just unusual competition is this articles com- between plete competition, elimination of articles not standardized. manufacturers here disclosed. Likewise, it unnecessary discuss the may argue Congress Counsel should effect as the statutes, amend competition so that light basic element fixation be eliminated engage between those who of what said in the Products Corn the manufacture and sale of standard arti- cases, supra. Staley and the Congress cles. has made no such distinction Discussion of effect of the N. R. A. and even were agreeable to such unnecessary in view of what we said proposal, neither we nor the Federal Trade case, Dietzgen supra. Commission could anti-monopoly revise legislation Congress has enacted. fails to show that If evidence one or legislative That is a judicial not a task. party more of the defendants What dismiss constitutes we should said defend- sufficient evidence proceedings. sustain ant from We should not a verdict of jury a court or of the for that reason order the Commission to Federal Trade Commis- proceeding. sion that a dismiss the conspiracy exists defend-

Case Details

Case Name: Aetna Portland Cement Co. v. Federal Trade Commission

Court Name: Court of Appeals for the Seventh Circuit

Date Published: Sep 20, 1946

Citation: 157 F.2d 533

Docket Number: 8360, 8361, 8371-8373, 8386, 8389, 8393, 8399, 8402, 8409, 8410

Court Abbreviation: 7th Cir.