addition, if a customer purchased 5,000 or more cases in any consecutive 12-month period, an additional discount of 10 cents per case was allowed by the respondent. If a customer purchased 50,000 or more cases in any consecutive 12-month period an additional 5-cent discount per case was allowed or a discount of 15 cents per case in lieu of the 5,000-case discount. These quantity discounts were not deducted from the invoice price but, instead, it was the practice of the respondent to make quarterly, semiannual, or other stated-period remittances or rebates to those customers whose purchases entitled them to the quantity discounts.

PAR. 7. In many instances the respondent both permitted and encouraged customers to purchase on a so-called pool-car arrangement, whereby a number of competing wholesalers or retailers joined in the purchase of a car for delivery at a specific destination. Participants in such pool-car arrangements would call at the destination point and pick up the salt consigned to them and pay cost of delivery from such destination point to their respective warehouses or places of business. Such customers were billed separately by the respondent at the carload price of $1.50 per case. In some localities respondent sold its Blue Label salt through brokers who arranged for customers to join in pool-car shipments. Respondent paid brokerage commission to such brokers and billed the individual customers, regardless of individual purchases, at the carload price of $1.50 per case. As in the previous case, the customers paid delivery costs from destination point to their respective warehouses or places of business. Respondent also permitted customers to pick up its Blue Label salt in any case quantity desired at certain of its warehouses at the price of $1.50 per case, customer paying cost of delivery to his warehouse or place of business. PAR. 8. In allowing the discount of 10 cents per case on the purchase of 5,000 cases of Blue Label salt, the respondent did not require the purchase of this amount by each individual customer in order to qualify but, instead, permitted combined purchases in order to obtain this discount.

In some instances, the respondent permitted one wholesaler to place orders for Blue Label salt for a number of his competitors. Respondent considered these combined purchases in allowing the quantity discount for 5,000-case purchases and issued its remittances or rebates to such wholesaler for distribution to his competitors. In some instances the wholesaler remitted the entire discount to his competitors and in others retained 2 cents per case and remitted the balance. To those wholesalers who received the entire discount the net price was $1.40 per case and to the others, $1.42 per case. None of such wholesalers individually purchased 5,000 cases of Blue Label salt in any consecutive 12-month period.

The respondent also permitted the Thomas & Howard Cos., a group of separate corporations, all wholesale grocers, located in various cities in North and South Carolina, to combine their purchases to obtain the quantity discount on purchases of 5,000 cases of Blue Label salt. No individual Thomas & Howard Co. purchased 5,000 cases of Blue Label salt, but, based upon the combined purchases of all the companies, the respondent remitted the discount of 10 cents per case to the Thomas & Howard Co. at Columbia, S. C., for distribution to the other companies in proportion to their purchases. In like manner respondent paid the quantity discount on 5,000-case purchases to C. D. Kenny Co. for distribution to its various branches, although no individual branch purchased 5,000 cases.

638680 47-6

The respondent also permitted the National Retailer-Owned Grocers, Inc., to combine the purchases of its members to obtain the quantity discount on 5,000-case purchases of Blue Label salt. This organization acts as purchasing agent for its membership of approximately 18,917 retail stores located in 42 States of the United States. These members in turn own about 116 wholesale warehouses, which act as wholesalers to such members. No individual wholesale warehouse or retail grocer purchased 5,000 cases of Blue Label salt from respondent, but, based upon combined purchases of all the member stores, the respondent remitted the quantity discount to the principal office of the National Retailer-Owned Grocers, Inc., for distribution to its members.

PAR. 9. The allowance of 15 cents per case made to purchasers of 50,000 or more cases of Blue Label salt was limited to four customers whose purchases were sufficient to qualify for this discount. These were American Stores Co. of Philadelphia, Pa.; National Tea Co. of Chicago, Ill.; Safeway Stores, Inc., of Oakland, Calif.; and Great Atlantic & Pacific Tea Co. of New York. These customers were all retail chain stores with branches and stores located in various cities throughout the United States. No branch or retail store purchased a sufficient quantity of respondent's Blue Label salt to qualify for said discount but, instead, the allowance was based upon the combined purchases of all stores and branches. Such discount in many cases permitted such retail chain groceries to sell respondent's Blue Label salt to the consuming public at prices less than wholesalers could reasonably sell said salt to their retail customers. There were other retailers in competition with the above-named retailer customers who purchased Blue Label salt from the respondent and who did not receive the quantity discount on purchases of 50,000 cases but who, instead, purchased said salt from the respondent at the carload price of $1.50 or at the 5,000-case quantity discount.

PAR. 10. Salt sold by the respondent, other than the Blue Label salt, was not sold on a delivered-price basis as was the custom with the Blue Label salt. Instead, such salt was sold at list price plus freight or transportation charges from the plant nearest the customer or from the plant serving the area in which the customer was located and from which delivery was customarily made. On such salt other than Blue Label, the respondent also maintains a schedule of discounts known as the "unit discount." One unit amounts to approximately 5 per cent of the list or plant price. One unit, or approximately 5 per cent of list price, is allowed to a customer who purchases in carload lots. This discount is also allowed to customers whose individual purchases are less than a carload but who combine their purchases to form a carload on the so-called pool-car arrangement.

To those customers who purchase table salt during a 12-consecutivemonth period in amounts equal to, or in excess of, $50,000, the respondent allows an additional unit discount amounting to approximately 5 per cent of the list price. While this discount does not apply to respondent's Blue Label salt, the amount of Blue Label salt purchased during the 12-month period is included in arriving at the total purchase of $50,000.

PAR. 11. The Commission finds that the discounts allowed by the respondent in the sale of its Blue Label salt, including price differentials on carload and less-than-carload lots, purchases under so-called pool-car

arrangements, and on purchases in 5,000- and 50,000-case quantities, as well as unit discounts allowed on carload lots and $50,000 purchases of salt other than Blue Label, constituted discriminations in price between purchasers of commodities of like grade and quality.

Salt is a staple commodity with a medium turnover and is generally sold by wholesalers to their retail customers on a lower margin of profit than that received on other commodities generally. Consequently, the price at which the wholesaler offers his table salt is usually controlling, and a difference of 5 cents per case may result in the loss of a sale to a customer, not only of the salt involved but of other commodities as well, the order for which might be placed with the salt purchase.

In some instances the discounts allowed by the respondent to some of its wholesaler customers have enabled such wholesalers to offer respondent's table salt to retail dealers at prices equal to prices paid by competing wholesalers or at prices less than competing wholesalers could reasonably sell said salt to the retailer customers.

The Commission further finds that customers of the respondent who receive the benefit of the various discriminatory prices granted by the respondent have a substantial advantage in selling respondent's salt in competition with other customers of the respondent who do not receive the benefit of said discount or who are obliged to pay respondent's full price for said salt. In order to sell respondent's table salt in competition with customers of the respondent who receive the benefit of respondent's discrimination in price, wholesalers who pay respondent's full price or who are denied the discounts allowed such favored customers must either sell at competitive prices and in so doing reduce their possible profits which they might reasonably obtain by the amount of the discriminations against them, or attempt to sell at higher prices than the favored customers of respondent charge for the same product, with the result of inability to secure business and a reduction in the volume of their sales.

In each instance where the respondent has granted special and regular discounts to its customers, there were competing customers in the same trading area who were purchasing their requirements of Blue Label salt from the respondent at the carload price of $1.50 per case or were paying full less-than-carload price.

By respondent's method of selling and the use of the quantity and special discounts hereinbefore described, customers paying the highest price are discriminated against with respect to all other customers, while the customers paying the lowest price are given the benefit of the discrimination as against other customers of the respondent. Furthermore, the medium-sized wholesale grocer is discriminated against with respect to his larger competitors and is given the benefit of the discrimination as against his smaller competitors.

The discriminations in price based upon purchase of 50,000 or more cases of Blue Label salt allowed to certain of the large retail chain stores constitute a discrimination in price not only against the smaller or mediumsized chain stores that cannot purchase Blue Label salt in such quantities from the respondent, but also constitute a discrimination against the small retail dealer who is in competition with such large chain stores but who is compelled to purchase Blue Label salt through wholesalers at prices in excess of the retail price maintained by such competitive volume pur

chasers. Respondent, by selling its Blue Label salt to such large retail chain stores at prices below those charged for the same salt when sold to wholesalers, forces retailer customers of such wholesalers to pay prices which prohibit competition in price between such small retailers and the large retail chain stores.

The Commission further finds that the various discounts and discriminatory prices hereinbefore described have been arbitrarily fixed by the respondent and that the effect thereof may be substantially to lessen and injure competition between customers of the respondent. The price differentials so fixed and established by the respondent have not been shown to be justified by reason of differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which its table salt is sold or delivered to its various customers.

PAR. 12. Separate and apart from the discounts hereinbefore described respondent has made special allowances or discounts to certain customers. For example, the respondent has, for several years, made to the Consolidated Cos., Inc., of Plaquemine, La., a special allowance of 72 cents per case from the carload price of $1.50 on its Blue Label salt. Consolidated Cos., Inc., is engaged in the wholesale grocery business and operates 22 units or branches throughout the State of Louisiana in competition with other wholesale grocers in Louisiana who purchase Blue Label salt from the respondent but who do not receive the special discount of 72 cents per case allowed by the respondent to Consolidated Companies, Inc.

An additional example is the allowance by the respondent of an additional unit discount on table salt other than Blue Label to the Thomas & Howard Cos., although said Thomas & Howard Cos. do not purchase $50,000 worth of salt during any consecutive 12-month period to entitle them to the additional unit discount.

The respondent refers to these and other special allowances as "competitive adjustments" and contends that they were arrived at to meet competition. Based upon the record in this case the Commission finds that the respondent has not shown the existence of facts which might indicate or prove that these discriminations in price were made in good faith to meet an equally low price of a competitor. The evidence submitted by the respondent is too vague and indefinite to show that the long-continued discriminations herein described were made in good faith to meet an equally low price of a competitor.

PAR. 13. The Commission finds that the effect of the discriminations in price generally and specifically described herein may be substantially to lessen competition in the line of commerce in which the purchaser receiving the benefit of said discriminatory price is engaged and to injure, destroy, and prevent competition between those purchasers receiving the benefit of said discriminatory prices and those to whom they are denied, and may tend to create a monopoly in those purchasers receiving the benefit of said discriminatory prices in said line of commerce in the various localities or trade areas in the United States in which said favored customers and their competitors are engaged in business.

The aforesaid discriminations in price by the respondent, as herein found, constitute violations of subsection (a) of Section 2 of an Act of Congress entitled, "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914 (Clayton Act), as amended by an Act of Congress approved June 19, 1936 (Robinson-Patman Act).

ORDER TO CEASE AND DESIST

This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, answer of the respondent, testimony and other evidence in support of the allegations of said complaint and in opposition thereto taken before a trial examiner of the Commission theretofore duly designated by it, report of the trial examiner upon the evidence and exceptions filed thereto, briefs in support of the complaint and in opposition thereto, and oral argument of counsel; and the Commission having made its findings as to the facts and its conclusion that respondent has violated the provisions of subsection (a) of Section 2 of an Act of Congress entitled, "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914 (Clayton Act), as amended by Act approved June 19, 1936 (Robinson-Patman Act).

66

It is ordered, That respondent, Morton Salt Co., a corporation, and its officers, representatives, agents, and employees, directly or through any corporate or other device in the sale of Morton's Free Running Table Salt, plain or iodized, or other grades of table salt in commerce as commerce is defined in the aforesaid Clayton Act, do forthwith cease and desist from discriminating directly or indirectly in the price of such products of like grade and quality as among wholesale or retail dealers purchasing said salt when the differences in price are not justified by differences in the cost of manufacture, sale, or delivery resulting from differing methods or quantities in which such products are sold or delivered,

(a) By selling any of such products to some wholesalers thereof at prices different from the prices charged other wholesalers who in fact compete in the sale and distribution of such products.

(b) By selling any of such products to some retailers thereof at prices different from the prices charged other retailers who in fact compete in the sale and distribution of such products.

(c) By selling any of such products to any retailer at prices lower than prices charged wholesalers whose customers compete with such retailer. For the purpose of comparison, the term "price" as used in this order takes into account discounts, allowances, and other terms and conditions of sale.

It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this order.