DISPOSITION OF CASES BY STIPULATION

PROCEDURE AFFORDS OPPORTUNITY FOR DISPOSING OF SOME CASES BY AGREEMENT TO DISCONTINUE UNFAIR PRACTICES

Under certain circumstances the Commission, instead of disposing of cases by formal complaint and trial, affords a respondent the privilege of disposing of a case by signing a statement of fact and agreement to discontinue the alleged unfair method of competition.

The Commission determines the form and subject matter of all stipulations which are prepared in accordance with the facts as disclosed by the investigation. If a respondent alleges the facts to be other than the investigation discloses, then the matter is not subject to stipulation and the proper and only procedure is to try the issue in order to develop the true facts.

In those classes of cases in which the Commission affords the respondent an opportunity to dispose of a matter by stipulation, that procedure accomplishes economically and expeditiously the same result as a complaint and order to cease and desist. It also simplifies the Commission's legal procedure and saves both the Government and the respondent the expense incident to trial of the complaint.

Often it appears that a violation occurs through ignorance or misunderstanding, and that the attention of the offender has only to be called to such violation to induce discontinuance of the practice. In such an instance the Commission, instead of issuing a formal complaint, grants the respondent an opportunity to sign a statement of facts disclosed by the investigation and agreement to cease and desist from the practices charged. If such stipulation is signed, further action is suspended; if it is not signed, the case goes to trial. Where signed stipulations are approved and accepted by the Commission, the public interest is deemed satisfied without issuance of formal complaint. They are not permitted in cases where a fraudulent business is concerned, where a legitimate business is conducted in a fraudulent manner, where the circumstances are such that there is reason to believe that an agreement entered into with the concern involved will not be kept, or where a violation of section 14 of the Federal Trade Commission Act, of the Clayton Act, or the criminal sections of the Sherman Act or any other statute, is believed to have occurred. The Commission reserves the right in all cases, for any reasons which it regards as sufficient, to refuse to extend the privilege of stipulation.

All stipulations are for the public record.

CASES AFFECT WIDE VARIETY OF BUSINESSES

Unfair trade practices discontinued as a result of stipulations comprise a wide variety of misleading misrepresentations affecting a large number of businesses. These practices are usually of a type that can be readily corrected through this procedure.

The range of commodities involved in the disposition of cases by stipulation embraces practically all types of products sold in interstate commerce.

TOTAL NUMBER OF STIPULATIONS

Stipulations in which various individuals, firms, and corporations agreed to cease and desist from the unlawful practices as set forth therein and which were approved by the Commission during the fiscal year ended June 30, 1939, included 271 cases in addition to 329 cases of a special class which were limited largely to false and misleading advertisements and were disposed of through a special procedure for this purpose. A total of 600 stipulations was thus approved and accepted during the year.

REPRESENTATIVE COMPLAINTS

ALLEGED VIOLATIONS OF FEDERAL TRADE COMMISSION ACT AND CLAYTON ACT, INCLUDING ROBINSON-PATMAN AMENDMENT

During the fiscal year ended June 30, 1939, the Commission issued 370 complaints, as compared with 305 issued during the last preceding fiscal year.

Three hundred and thirty-seven of these complaints charged violation of section 5 of the Federal Trade Commission Act prohibiting unfair methods of competition and unfair or deceptive acts and practices in commerce. Of this number, two charged violation of section 5 of the Federal Trade Commission Act and of section 2 of the Clayton Act as amended by the Robinson-Patman Antidiscrimination Act; and three charged violation of section 5 of the Federal Trade Commission Act and of section 3 of the Clayton Act. Three complaints charged violation of section 3 of the Clayton Act only, making a total of six section 3 complaints.

The total number of complaints issued charging violation of the Clayton Act was 38, of which 32 alleged violation of section 2 of that act as amended by the Robinson-Patman Act.

See p. 135.

I. COMPLAINTS UNDER FEDERAL TRADE COMMISSION ACT

(Complaints which also involve the Robinson-Patman Act, or section 3 of the Clayton Act, are discussed under those headings)

A. SUPPRESSION OF PRICE COMPETITION AND OTHER ALLIED RESTRAINTS ON

TRADE

(Complaints referred to below are identified by docket numbers. Full text of any com. plaint may be obtained upon application to the Federal Trade Commission, Washington)

I. COMBINATIONS TO FIX AND MAINTAIN PRICES

Sixteen complaints were issued charging combination and conspiracy in restraint of trade through price fixing and other similar agreements. The agreements were entered into, to a considerable extent, among members of, and within, certain industries, who were alleged to have combined to fix minimum prices at which their products were to be sold or to fix uniform prices and discounts among the members, all in violation of section 5 of the Federal Trade Commission Act. In several of these complaints, the agents for establishing and making the combinations effective were allegedly trade associations. A brief description of the complaints follows:

Four glass companies and two local labor-union organizations of glaziers.-A complaint, followed later by an order to cease and desist, was issued against four glass distributing companies and two local labor-union organizations of glaziers. Details of the case are presented under Orders to Cease and Desist. (See Pittsburgh Plate Glass Co. and others, p. 73.) (3491.)

Association of producers of calcium chloride.-Four manufacturers, alleged to control substantially the entire output of calcium chloride in the United States, and their trade association, were charged with engaging in a conspiracy to fix prices and with using other unlawful methods to restrain and eliminate competition in the sale of their product. (3519.)

Manufacturers of combination wood and wire portable corn eribs and silos.-Seven manufacturers were charged in a complaint with unlawfully conspiring to fix and maintain uniform delivered prices for such products. Later an order to cease and desist was entered. The complaint charged that the respondent manufacturers, whose combined production comprises the major portion of the total output of the industry, entered into and put into effect understandings and agreements to unlawfully restrict, monopolize, and eliminate competition in the sale of their products in certain States in order better to effectuate their price-fixing agreement. (See under Orders to Cease and Desist, Rowe Manufacturing Co. and others, p. 73.) (3544.)

An association of maltsters and its 19 member manufacturers were charged with fixing and maintaining uniform delivered prices for malt. These manufacturers were alleged to produce more than 65

percent of all the malt manufactured in the United States and to constitute the only regular source of supply for many purchasers. The complaint charged that the association was organized in 1930, when, for the purpose of eliminating price competition among themselves, the manufacturers, through the association, entered into their price-fixing conspiracy, and since that time have fixed and maintained uniform delivered prices. (3555.)

Associations of producers of veneer containers used in packing fruits and vegetables.-A complaint was issued charging five trade associations and their member manufacturers producing the above-named products with fixing and maintaining uniform prices. A business engineering firm was also made a respondent. The respondent manufactures allegedly made approximately 90 percent of all the veneer containers produced east of the Rocky Mountains. The complaint alleged that the respondents entered into agreements and understandings for the purpose and with the effect of eliminating competition and of creating a monopoly in the sale of veneer containers. (3556.)

Producers of agricultural and chemical lime.-Twenty producers were charged with fixing and maintaining by combination and agreement the prices at which their product should be sold to customers in the southeastern United States where all their plants were located. The respondent producers were alleged to engage in their price-fixing practices with the aid and cooperation of their paid representative whom the complaint also named as a respondent. The acts and practices of the respondents, the complaint charged, have, among other things, increased the prices of agricultural and chemical lime and created in the respondent producers a monopoly in the sale of their product in the Southeast. (3591.)

Building material dealers.-Unlawful restraint of trade and suppression of competition in the sale of building supplies shipped between Wisconsin and other States was alleged in a complaint issued. against 11 Milwaukee building-material dealers and a certain individual described as being ostensibly a building material dealers' consultant and advisor. To suppress competition and develop in the respondents a monopoly in the purchase and sale of building supplies in Milwaukee County and other Wisconsin counties, the respondents, it was charged, entered into and executed agreements and understandings which had the effect, among other things, of unlawfully preventing certain out-of-state manufacturers from selling their products for shipment into Milwaukee County and other Wisconsin counties; of extorting unearned commissions from certain manufacturers and sellers, and of preventing competing dealers from purchasing building materials outside Wisconsin. The respondents' practices were alleged to have the effect of substantially and artificially increas

ing and maintaining the prices at which building supplies were sold to purchasers and consumers and of depriving them of the benefits of fair, free, and normal competition. (3631.)

An association of manufacturers of wood-cased lead pencils, and its 13 members, alleged to produce more than 90 percent of all the wood-cased lead pencils manufactured in the United States, were charged with fixing and maintaining uniform prices for their woodcased lead pencils. They were also charged with establishing, by agreement, uniform agency contracts with their local distributors, whereby the distributors, when offering bids to public agencies, were limited to a 10 percent commission, of maintaining identical price lists on comparable pencils, and charging same simultaneously. Likewise, it is alleged that they, by agreement, offered uniform bids, either directly or through their distributors, to prospective purchasers. (3643.)

Producers of hardwood charcoal.-Nineteen producers, alleged to manufacture approximately 70 percent of the country's output of hardwood charcoal which is used principally as a fuel, were charged with participating in price-fixing conspiracies to eliminate and suppress price competition in sales to the wholesale and retail trade. Two nonproducing corporations, allegedly organized to act as exclusive sales agents for all but two of the respondent producers, were also named as respondents. (3670.)

Association of power and gang mower manufacturers.-Nine companies, manufacturing practically all the power lawn mowers sold in the United States, and their association, were charged with forming a combination, understanding, and conspiracy to fix and maintain by agreement through the association certain price lists, uniform trade-in allowances, and uniform discounts for the purpose of eliminating price competition among themselves. Federal, State, and city governments are an important class of the respondents' purchasers, according to the complaint. (3689.)

Manufacturers of corporation stops and curb stops.-Five manufacturers of corporation stops and curb stops, a type of pipe fitting used in waterworks and gas systems and sold principally to municipalities and owners of public utilities, were charged with combining and agreeing to fix and maintain prices. The respondent companies were said to constitute substantially all the manufacturers of such products in the United States. The complaint charged that they, for the purpose of effectuating their agreement, fixed and maintained the prices at which their products were sold; fixed and maintained uniform terms and conditions of sale; submitted uniform and identical bids to purchasers, and used coercive measures to compel jobbers to maintain their fixed prices. It was charged that the acts and prac