United States v. E. I. Du Pont De Nemours & Co.

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TABLE OF CONTENTS.

COMPARISON OF THE ECONOMIC AND LEGAL CONCEPTS OF MONOPOLY.

THE PRESENT ECONOMIC AND LEGAL VIEWS OF MONOPOLY AND COMPETITION

a. Competition and monopoly in the economic sense.

b. The competition intended by the Sherman Act.

c. The economic view of the effect of potential competition upon monopoly.

d. The economic view of the effect of substitute products upon monopoly.

PART I — CELLOPHANE.

A. DuPONT’S POSITION DOES NOT VIOLATE § 2 OF THE SHERMAN ACT.

1. DuPONT DOES NOT HAVE MONOPOLY POWER.

a. Plaintiff must establish duPont has sufficient power arbitrarily to raise prices or to exclude competitors.

FINDINGS OF FACT.

I. Description of Defendant duPont (Findings 1-6).

II. Description of Cellophane (Findings 7-12).

III. DuPont’s Entry Into the Cellophane Business and Organization of duPont Cellophane Company (Findings 13-36).

IV. The “Market Setting” in Which Cellophane is Sold (Findings 37-79).

V. DuPont Competed by Research to Improve Quality and Lower Cost (Findings 80-122).

VI. DuPont Competed by Lowering Prices (Findings 123-149).

VII. Competition Between Cellophane and Other Flexible Packaging Materials (Findings 150-278).

SPECIFIC USES:

1. White Bread.

2. Specialty Breads.

3. Caice and Sweet Goods.

4. Meat.

5. Candy.

6. Crackers and Biscuits.

7. Frozen Foods.

8. Potato Chips, Pop Corn and Snacks.

9. Cereals.

10. Fresh Produce.

11. Paper Goods and Textiles.

12. Cigarettes.

13. Butter.

14. Chewing Gum.

15. Other Food Products.

16. Other Tobacco Products.

17. Cheese.

18. Oleomargarine.

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VIII. Results of duPont’s Competition With Other Materials (Findings 279-292).

IX. DuPont Competed With Sylvania (Findings 293-330).

X. The Basic Moistureproof Patents (Findings 831-339).

XI. DuPont Did Not Engage in Predatory Practices as Alleged.

A. DuPont’s decisions as to changes in its business capacity were made on the basis of proper business considerations, and not to suppress competition or to create artificial shortages (Findings 340-353).

B. Potential competitors were not excluded (Findings 354-388).

C. Distribution outlets were not controlled (Findings 389-455).

D. Patents were not abused (Findings 456-532).

XII. DuPont Did Not Conspire to Monopolize.

A. With Sylvania (Findings 533-591).

1. Patent License Agreement (Findings 533-583).

2. Prices (Findings 584-591).

B. With foreign concerns to exclude imports (Findings 592-645).

XIII. DuPont Did Not Attempt and Is Not Now Attempting to Monopolize.

A. General (Findings 646-660).

B. Olin license (Findings 661-686).

XIV. DuPont Has Not Monopolized (Findings 687-732).

CAPS AND BANDS (Findings 733-819).

OTHER FACTS (Findings 820-834).

CONCLUSIONS OF THE MASTER FACTS (Findings 835-854).

RESUMPTION OF THE OPINION.

b. Competitive conditions preclude acquisition of market control and hence of monopoly powers over cellophane.

i. “Market Setting”.

ii. Candy — A Case History.

iii. Testimony op Independent Witnesses.

c. DuPont has not “power to raise cellophane prices”.

d. DuPont has not the “power to exclude competition”.

1. General.

2. Potential Competitors.

3. Patents.

4. Sylvania Competition.

e. Application of recognized economic tests further evidences the lack of monopoly power.

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2. DuPONT’S POSITION IS NOT TO BE ATTACKED BECAUSE IT, RESULTS FROM TECHNICAL SKILL AND COMPETITIVE ACTIVITY.

a. The moistureproof patent is, I conclude, a defense.

b. Monopolization requires a factual showing of illegality.

c. Technical skill and other competition were responsible for duPont’s position in the field.

B. IS ORIGIN OF DuPONT’S POSITION LAWFUL?

C. WAS DuPONT’S POSITION MAINTAINED BY PREDATORY ASSERTION OF MONOPOLY POWER?

1. TESTS TO BE APPLIED.

2. ALLEGED SUPPRESSION OF SYLVANIA.

a. The Moistureproof Patent License Agreement.

b. The Alleged Price Agreement.

3. PATENT PRACTICES.

1. Ultra-Violet Light License.

2. Ribbon Licenses.

3. Ethylene Glycol License.

4. Marathon License.

5. The Sealing Licenses.

6. Interferences.

7. Tying Provisions.

4. CONTROL OF DISTRIBUTION OUTLETS.

5. EVIDENCE PLAINTIFF IGNORES.

PART II — CAPS AND BANDS.

NO FACTUAL BASIS EXISTS FOR CLAIMING A VIOLATION OF § 2 AS TO CAPS AND BANDS.

CONCLUSION OF LAW.

LEAHY, Chief Judge.

This is a civil suit by United States of America under § 4 of the Sherman Act, 15 U.S.C.A. § 1 et seq., charging defendant with monopolizing, attempting to monopolize and combining and conspiring to monopolize trade and commerce among the several states of the United States in cellophane and caps and bands. The Act of July 2, 1890, 26 Stat. 209 , commonly known as the Sherman Act as amended, provides in part:

“Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemean- or * * *. [ 15 U.S.C.A. § 2 ].

******

“Sec. 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney-General, to institute proceedings in equity to prevent and restrain such violations. * * * [15 U.S. C.A. § 4.]”

This case was instituted originally in the District Court of the United States

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for the District of Columbia on December 13, 1947. On April 28, 1949, the case was transferred to the District of Delaware.

Defendant, E. I. duPont de Nemours and Company, is a Delaware corporation. It is successor to duPont Cellophane Company, Inc. Throughout the period covered by the complaint, it or its predecessors manufactured and sold, in interstate and foreign commerce, regenerated cellulose in the form of film (cellophane) and in the form of bands. Prior to the filing of the complaint in this case, it also manufactured and sold cellulosic caps.

DuPont entered the cellophane business in 1923. It collaborated, under written agreements with La Cellophane (a subsidiary of the Comptoir which is the largest French rayon producer), in establishing the first duPont cellophane company. In 1929 duPont Cellophane Company, Inc., was reincorporated as a wholly owned subsidiary of duPont. In 1936, duPont took over the operation of this business and dissolved duPont Cellophane Company, Inc.

In addition to La Cellophane, the following European producers have been named as co-conspirators but not party defendants: British Cellophane, Ltd. (England); Canadian Industries, Ltd. (Canada); Kalle & Co. (Germany); Viscose Francaise (France); and Viscose Development Company, Ltd. (England) .

Plaintiff’s argument and briefs treated in a highly interesting fashion the comparison of the economic and legal concepts of monopoly. But the final legal definition of the economic view of monopoly is to be left for decision by the Supreme Court.

COMPARISON OF THE ECONOMIC AND LEGAL CONCEPTS OF MONOPOLY.

Economic philosophies concerning monopoly and what should be done about it are legion; no one view can be said to be “the economic” concept. While these philosophies can not be classified into air-tight compartments, they do fall into distinct schools of thought. These schools are presently engaged in debate over the degree of monopoly power which is economically desirable and which the law should permit. The economic discussion had its genesis in an attempt to bridge what was believed to be a gap between the legal and economic concepts of monopoly. This discussion has resulted in some agreement among economists upon classifications of various types of competition which exist in the market today, but in sharp disagreement upon their significance as indicia of monopoly.

Plaintiff contrasted first the legal and economic concepts of competition and monopoly as presently understood, and as affected by potential competition and the presence of substitute products. Second, it discussed the coalescence of the old patterns of economic and legal thought. Third, it discussed the economic concepts of monopoly whose application is proposed for the future and their contrast with the existing legal tests of monopoly.

THE PRESENT ECONOMIC AND LEGAL VIEWS OF MONOPOLY AND COMPETITION.

Recent economic discussion has focused attention upon differences of opinion which exist among economists themselves and between economists and the courts as to the type and degree of competition which public policy, as expressed in the Sherman Act, contemplates. Differences also appear in the significance certain economists and courts attach to potential competition and to presence in the market of alternative or substitute products.

a. Competition and monopoly in the economic sense.

Today economists regard “perfect competition” and “pure monopoly” only as theoretical ideals of the opposite boundaries of possible market sitúat

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ions.

1

While economists have not crystallized their terms, in a semantic sense, they

recognize

between the two extremes of perfect competition and pure monopoly there are “pure competition”, “imperfect competition”, “oligopoly”, and “monopolistic

competition”

2

We start, Clark tells us, “with recognition that all practicable forms of competition are ‘imperfect’, and that the ‘perfect competition’ of economic theory is academic.”

3

Pure competition, sometimes defined as a less perfect form of competition than perfect competition, has been said by Mason to be that state of the market wherein “no buyer or seller could, by his own action, influence the price of the goods to be bought and sold.”

4

Mason views the concept of “pure competition of the economic theorists” as “divorced from time and space and independent of technological and other considerations.”

5

Imperfect competition in economic parlance is a term which includes all market situations falling between pure competition and pure monopoly, including what is known as oligopoly and monopolistic competition.

6

Monopolistic competition is now recognized as embracing those situations where either a few or many sellers trade in differentiated products, whereas “oligopoly” is regarded as consisting of those situations where a few sellers sell only a standardized product.

7

There is much debate among economists with respect to the significance which should be attached to market behavior in industries which are oligopolistic.

8

While some economists take the view* oligopolistic competition or oligopolies controvert the spirit of the antitrust laws, others contend oligopolies are able to pass along the benefits of efficiency of size to the consumer and are not socially disadvantageous.

9

Some admit in oligopolistic industries a considerably higher degree of competition than that which exists would be “workable” or effective.

10

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In attempting to evolve an economic approach to the concepts of monopoly and competition, some economists have proposed a theory of “Workable competition.”

11

This theory has, as yet, received no precise definition.

12

Rather it is an approach by which some economists propose to determine, in any given industry, whether the industry is competitive or monopolistic, and what degree of competition is obtainable by a practical policy without substantial loss of efficiency.

13

Monopoly, then, in economics, is not the simple test of perfect monopoly. In between the theoretical economic concepts of perfect competition and perfect monopoly lie various forms of imperfect competition which possess varying degrees and characteristics of monopoly. Pure monopoly which stands at the other extreme in economic thought from pure competition, has been defined by Stocking and Watkins as follows:

14

“Pure monopoly means a single seller of a product for which no substitute is available. But, like perfect competition, such a monopoly is a theoretical ideal.”

While some economists stress what they believe to be the efficiencies of oligopoly, others believe while a competitive structure may have imperfections, it is nevertheless the greater spur to progress and benefits to society. Corwin Edwards states:

15

“But although the maintenance of competition will not guarantee that the economy will work well, impairment of competition by monopolistic restrictions, public or private, increases the chance that it will work badly. Although the imperfections of the competitive process are too great to make economic adjustments quick, neat, and exact, the forces of competition tend to reduce many substantial economic maladjustments.”

Stocking and Watkins state:

16

“To maximize his earnings a monopolist must so regulate the inflow of new capital as not to impair the value of the old, whether it is a question of new processes or of new products that will compete with old. Where a monopolist can realize profits from a new product only by accepting smaller revenues from an old, he will be reluctant to introduce the new. Unless he can expect a monopoly return from the new that more than offset the losses of monopoly revenue from the old, he will not put the new product on the market. A monopolist restricts not only output but new investment as well. In this way monopoly tends to block innovation and change, to retard technological progress and to deprive society of its benefits.”

b. The competition intended by the Sherman Act.

Plaintiff shows the Sherman Act does not define the degree of competition which its policy contemplates, nor label it as either “perfect”, “pure”, “monopolistic”, or “atomistic”. The purpose of Congress in passing the Sherman Act was to preserve our system of free trade and competitive economy in order to protect the public from the evils thought to flow from undue restraints and monopolies. The object of Congress was “to secure competition and

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preclude combinations which tend to defeat it.” International Harvester Co. of America v. State of Missouri, 234 U.S. 199, 209 , 34 S.Ct. 859, 862 , 58 L.Ed. 1276 . The purpose of the statute was “to prohibit monopolies, contracts and combinations which probably would unduly interfere with the free exercise of their rights by those engaged, or who wish to engage, in trade and commerce —in a word to preserve the right of freedom to trade.” United States v. Colgate & Co., 250 U.S. 300, 307 , 39 S.Ct. 465, 468 , 63 L.Ed. 992 .

As Chief Justice White remarked in Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 56 , 31 S.Ct. 502, 514 , 55 L.Ed. 619 , both at common law and under the Sherman Act, “practical common sense caused attention to be concentrated not upon the theoretically correct name to be given to the condition or acts which gave rise to a harmful result, but to the result itself and to the remedying of the evils which it produced.”

c. The economic view of the effect of potential competition upon monopoly.

Freedom of entry of new firms into a given industry has been suggested by some economists as the distinguishing feature between competitive and monopolistic industries. As pointed out by Stocking and Watkins:

17

“Economists who believe it impracticable to change greatly the structure of American industry count on potential competition and the competition of substitute products to make the existing structure of industry workably competitive by curbing monopoly power over the long run.”

Under this approach the continuation of monopoly is condoned so long as there is sufficient likelihood potential competition will act as a brake upon the monopolist’s use of its power, and regardless of the effect which the monopoly may have upon actual competitors.

Edwards views potential competition as a curb upon monopoly power “so long as entry is easy.”

18

Clark, who thinks industries having large scale production may be competitively workable, ascribes lesser effect to the power of potential competition. He says neither potential competition nor the presence of substitutes “is a perfect check; but both together may come near it under favorable conditions.”

19

Lewis represents another view when he states:

20

“The key to the effectiveness of competition is to be found in its power systematically and predictably to compel economic decisions, and I do not believe that any such power or force characterizes the competition present in industries composed of, or dominated by either a single firm or a few large firms. * * * To speak of potential competition as a compelling regulatory force in this situation is to be blind to the strength of the factors that retard and will continue to retard the drive of potential competition to become actual competition.”

Plaintiff argues potential competition does not serve as adequate legal test of the existence of monopoly, although the ability of new firms to enter an industry may give some indication of the strength of the barriers erected by the monopolist. One eminent legal writer, Milton Handler, pointed out some time ago that a combination may be held unlawful even though it has imposed no restraints upon new competition. Handler stated:

21

“Many economists who have disagreed with the major purpose of the anti-trust laws have felt that the public is adequately safeguarded if potential competition remains free and unfettered at all times. This is not the premise on which

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the Sherman Law is based. The instrument of control under this statute is both actual and potential competition.”

d. The economic view of the effect of substitute products upon monopoly.

Economists differ on the question of what significance should be attached to the presence in the market of products which are substitutes or alternatives for the product said to be monopolized.

In an address before the New York State Bar Association in 1950, Professor Meriam decried the action of Judge Learned Hand in United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416 , both in restricting his consideration of the product involved to virgin aluminum ingot and ruling out secondary aluminum which competes with virgin, and in paying “no attention to the very significant business fact that aluminum competes with other light metals of different chemical composition.”

22

Other economists point out there are few commodities for which no substitutes are available.

23

The “monopolistic competition” school of thought is based upon the premise differentiation in products confers some degree of monopoly power. Wallace, in expressing his understanding of that school of thought, states:

24

“The theory of monopolistic competition emphasizes the significance of variation or differentiation of products. Successful differentiation confers some monopoly power by attracting a clientele which has some preference for the article of a particular seller.”

Chamberlin, a pioneer of the monopolistic competition school states:

25

“A monopoly of ‘Lucky Strikes’ does not constitute a monopoly of cigarettes, for there is no degree of control whatever over substitute brands. But if, in order to possess a perfect monopoly, control must extend to substitutes, the only perfect monopoly conceivable would be one embracing the supply of everything, since all things are more or less imperfect substitutes for each other. * •» * The term ‘monopoly’ is meaningless without reference to the thing monopolized. A monopoly of diamonds is not a monopoly of precious stones, nor, to go still further, of jewelry. Differentiation implies gradations, and it is compatible with perfect monopoly of one product that control stop short of some more general class of which this product is a part, and within which there is competition.”

After pointing out this idea was no departure from accepted doctrine, and citing as his authority both Taussig and Ely,

26

Chamberlin writes (p. 67):

“Of course, prices might be higher yet if, instead of a monopoly of each different brand, there existed a monopoly of the entire class of product. The more substitutes controlled by any one seller, the higher he can put his price. But that is another matter. As long as the substitutes are to any degree imperfect, he still has a monopoly of his own product and control over its price within the limits imposed upon any monopolist — those of the demand.”

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Clearly, there are different schools thought in economic circles with respect to the effect upon monopoly of the presence of substitute products. of

In general, plaintiff charges defendant maintains a monopoly position in the production and sale of cellophane and bands. It is charged defendant unlawfully acquired and maintains a monopoly position in the field of cellophane and bands — that defendant’s predatory practices in the markets for these products ■demonstrate an intent to monopolize and the exercise of monopoly power. The unlawful acquisition is traced, in the beginning, to defendant’s foreign relations with European companies, which resulted in a cartel which divided world markets. There is the charge of abuse of patents; exclusionary and oppressive acts and practices; and restraint of trade in distribution of the products in connection with both direct and indirect sales.

PART I — CELLOPHANE.

Certain issues of fact and law must ■control the decision in this case. When these controlling issues are isolated, it will be apparent there are fatal deficiencies in the Government’s proof, and the record fails to establish those facts which are essential to support the charges in the complaint.

The history of duPont’s cellophane business is a record of competitive .achievement. DuPont was the first American company to manufacture this new wrapping material. To pioneer the cellophane business required foresight, and a willingness to take risks. DuPont had little technical experience in this line of ■chemistry. The product had not been proven as a packaging material. It had had little acceptance in this country.

DuPont entered the business in the ■only manner that was practicable. It ac■quired the commercial process from the French. This process was obtained on the best terms duPont could negotiate. The two groups, American and French, had already been successful partners in rayon. No desire to limit competition was involved, for neither partner to the venture was engaged in business in competition with the other, and there is no indication anyone was interested.

DuPont saw the chance for profit and utility for cellophane if it could be introduced into the mass production packaging markets of the United States. It decided to bring a new competing material into the flexible packaging market, an established field of competitive business activity.

Cellophane was not at first acceptable in the trades to which it was offered. Manufacturing techniques were crude; quality unsatisfactory, and costs made price of cellophone prohibitive for many uses. There were distribution and merchandising problems to be met. Only by effective competition could duPont hope to gain recognition for its product in markets where other materials were entrenched. The business had to be built up by creative research.

DuPont’s technological achievements were of high order. Through research it improved manufacturing efficiency, reduced costs, improved quality, developed new types of materials and lowered prices to obtain acceptance for its product, all in the face of competition. Research results were continuously put to use in its plants.

The product obtained from the French did not meet the needs of the American market. DuPont invented a new product, moistureproof cellophane, which proved to be the product upon which the cellophane business has been built. It obtained a product patent under which all its moistureproof cellophane was produced during the period of the monopoly charged in the complaint. It then exploited that patent, well within the purposes and intentions of the patent grant. Its production expanded; it made many types of moistureproof cellophane; it gave increasing service to its customers; it neither curtailed its initiative nor restricted the capital which it

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was willing to devote to the enterprise. DuPont achieved through business method an increasing success in its competition with other packaging materials.

As cellophane got recognition in the trade, others entered various phases of the business as converters, users, suppliers of raw materials, manufacturers of equipment, and the like. Cellophane creates competition. Throughout the flexible packaging markets this competition is felt. It stimulates efforts of other producers to manufacture more efficiently. It stimulates research. The consumption of flexible packaging materials including cellophane has grown at a rapid rate. Within these markets the competition is intense. New producers have entered. No one material or one supplier controls — certainly not duPont, which has neither the power to raise prices nor to exclude competitors.

After reviewing the development of this business, plaintiff has been unable to bring a single person who says he was injured or who claims to have been denied an opportunity to participate. Prices have consistently been lowered and reflect competitive pressures. Production has expanded. Benefits from research have been passed on to consumers. DuPont has not conducted its cellophane business in a restrictive way. There are no artificial controls which it can exercise in the markets where its product is sold.

A. DuPONT’S POSITION DOES NOT VIOLATE § 2 OF THE SHERMAN ACT.

The charge here is duPont monopolizes cellophane. The charge involves two questions: 1. does duPont possess monopoly powers; and 2., if so has it achieved such powers by “monopolizing” within the meaning of the Act and under United States v. Aluminum Company of America, 2 Cir., 148 F.2d 416, 429 . Unless the first is decided against defendant, the second is not reached. First, then, to the question of existence of monopoly power.

1. DuPONT DOES NOT HAVE MONOPOLY POWER.

a. Plaintiff must establish duPont has sufficient power arbitrarily to raise prices or to exclude competitors.

Ultimate determination of issues raised by a charge § 2 has been violated, involves application of established principles. The tests are clear. They have been laid down in numerous cases. The issues in this litigation are fact issues, not law issues. When facts are analyzed! in the light of established tests* result is clear.

The voluminous record in this case requires the distillation of a great mass of facts which are basic to a decision.

FINDINGS OF FACT.

I. Description of Defendant duPont.

(Findings 1-6)

1. E. I. duPont de Nemours & Co. (hereafter called “duPont”) is a Delaware corporation. It manufactures chemical products, including many types of plain and moistureproof cellophane.

27

Prior to 1936, duPont engaged in the manufacture of these products through subsidiary companies: From 1923 to 1929, through duPont Cellophane Company in which duPont had 52% interest, and from 1929 to 1936, through duPont Cellophane Company, Inc., in which duPont had a 100% interest.

28

2. Within the duPont organization responsibility for the manufacture and sale of cellophane and bands rests with the Film Department which makes and sells other products, such as cellulose acetate film, polyethylene film, cellulose sponges, and cellulose bands.

29

From

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1936 until formation of the Film Department in April 1950, cellophane was handled with other products by the Cellophane Division of the Company’s Rayon Department.

30

The Cel-O-Seal section of the division handled caps and bands.

31

8. DuPont built cellophane manufacturing plants and commenced operations in them:

Plant and Location Operation Started

Buffalo #1 (N.Y.) April, 1924

Old Hickory #1 (Tenn.) October, 1929

Old Hickory #2 (Tenn.) August, 1930

Spruance #1 (Richmond, Va.) November, 1930

Buffalo #2 (N.Y.) February, 1932

Spruance #2 (Richmond, Va.) May, 1937

Clinton #1 (Iowa) March, 1941

Clinton #2 (Iowa) February,

1947

32

All plants are operating today except plant known as Buffalo #1 which was ■closed in 1942 and thereafter converted to manufacture of rayon for tire cord at the request of the United States to meet urgent production problems during the war.

33

4. DuPont sells types of cellophane designed to serve specific packaging needs.

34

In 1949, duPont sold 108 varieties of cellophane.

35

5. In 1950, duPont produced 202,000,-000 lbs. of cellophane

36

and its sales in that year totalled $99,181,192 of which $89,850,416 was moistureproof cellophane.

37

6. DuPont sells cellophane in interstate trade.

38

Cellophane is sold in foreign commerce.

39

II. Description of Cellophane.

(Findings 7-12)

7. Plain cellophane is a thin flexible non-fibrous film of regenerated cellulose containing glycerol as a softener. It has little resistance to the passage of moisture vapor and is used for wrapping products as to which the gain of moisture is not important.

40

Moistureproof cellophane is a different product. It is a thin transparent flexible non-fibrous film of regenerated cellulose containing a softener, one of which is glycerol, combined with a moistureproofing composition. Moistureproof cellophane is used for packaging foodstuffs; gain or loss of moisture is important.

41

Plain cellophane is manufactured in various thicknesses, colors, as well as transparent form.

42

Types of moisture-proof cellophane differ in their resistance to moisture vapor, ability to be sealed by heat and anchoring of the coating to the base film.

43

Specific types of moistureproof cellophane were developed to meet' the packaging requirements of specific products.

44

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8. In commercial practice moisture-proof cellophane is 100 times as impervious to the transmission of moisture vapor as plain cellophane

45

9. Plain cellophane is manufactured by extruding viscose made to specifications through a narrow slot in a hopper into a chemical bath where it coagulates in the form of a thin sheet; this sheet is run through a succession of purifying baths and while wet is immersed in a water solution of glycerol, some of which is absorbed; excess moisture is then removed from the surface of the film and the material is dried to a predetermined moisture content.

46

Moistureproof cellophane is manufactured by combining with a base thin transparent film of regenerated cellulose, containing a softener, one of which is glycerol, a moistureproofing coating composition, which may comprise waxes, resins, nitrocellulose or other film forming materials and plasticizers.

47

The manufacturing processes are chemical in nature and require for successful commercial operation a degree of technical knowledge and controls. The mechanical aspects of the operations are intricate.

48

10. Until the invention and development of moistureproof film, cellophane sales were relatively unimportant.

49

Production of moistureproof cellophane, which began in 1927, by 1930 had exceeded production of plain cellophane.

50

Subsequent growth of cellophane sales has been due to moisture-proof cellophane.

51

In 1936, United States production of plain cellophane amounted to 24,650,000 lbs. and by 1947 had increased to only 25,780,000 lbs. During the same period, United States production of moistureproof cellophane increased from 50,941,000 lbs. to 148,-769,000 lbs.

52

11. After preparation of viscose solution, cellophane is extruded through a casting machine. These machines are 200 feet long and are operated by duPont at speeds up to 120 meters per minute, carrying a film 1/1,000th of an inch thick (300 gauge) from a semi-coagulated to a coagulated condition with an allowable variation in gauge of only 1/10,000th of an inch.

53

DuPont’s moistureproof cellophane goes through the further stage of a six story coating tower in which the film running at a speed of 200 meters per minute has applied to it on each side a coating of 1/100,000th of an inch thick, with an allowable tolerance in coating thickness of approximately 1/1,000,000th of an inch.

54

12. Plain and moistureproof cellophane are separate products from cellulose caps and and bands which are made by separate processes, used for different purposes and sold to a different trade.

55

III. DuPont’s Entry Into the Cellophane Business and Organization of duPont Cellophane Company.

(Findings 13-36)

13. DuPont was the first company to manufacture plain cellophane in the United States,

56

and the first to manufacture moistureproof cellophane anywhere in the world.

57

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14. La Cellophane, Societe Anonyme, referred to as “La Cellophane”, is a French corporation with principal place ■of business at Paris, France.

58

Prior to 1941 it had association with an organization known as Comptoir des Textiles Artificiéis, referred to as “Comptoir”, a French organization with interests in rayon.

59

La Cellophane produces cellophane in France.

60

It was the first company to manufacture plain cellophane •on a commercial basis, and was engaged in this business in France in 1917.

61

15. Jacques Brandenberger of France invented the process and machinery for the manufacture of plain cellophane about 1912. He obtain patents both in Europe and United States on his inventions. Brandenberger’s processes and patents were transferred to La Cellophane on its formation, at which time Brandenberger joined La Cellophane. The United States patents were assigned to duPont Cellophane Company in 1923. Some of these were subsequently used in duPont Cellophane Company’s operations.

62

16. Prior to duPont’s decision to manufacture plain cellophane, duPont had been associated with Comptoir in the manufacturing of viscose rayon in the United States through a jointly owned company called duPont Fibersilk Company (later, duPont Rayon Company). This association had been profitable. The processes and technical information, including viscose chemistry, engineering and other details of manufacture of rayon, had been acquired from the Comptoir after fruitless experimentation by duPont to develop an artificial fiber.

63

17. DuPont management decided to invest money in cellophane manufacture as part of a policy determined after World War I to diversify into a broad line of chemical products.

64

In entering the cellophane business, duPont had no intention to commit any act violative of the Sherman Act.

65

18. About 1923, duPont became interested in cellophane when it learned through the Comptoir, La Cellophane had developed and was operating a commercial process for the manufacture of plain cellophane. DuPont conducted negotiations with the French interests for the American rights to this process, which culminated in the formation of duPont Cellophane Company and execution of certain technical agreements.

66

No evidence exists any other concern in the United States was interested in securing the French process at this time.

19. The French would not disclose any aspect of their cellophane process to duPont unless duPont would agree to refrain from manufacturing cellophane for five years in the event it determined after disclosure not to take a license.

67

20. The French were not willing to make their process available to duPont unless duPont agreed the French could participate in the profits of United States manufacture

68

and unless duPont was willing to confine to North and Central America its manufacture and sale of cellophane made by the French process.

69

DuPont sought to obtain ex-

*58

elusive right to La Cellophane’s patents and processes and responsibility for the manufacturing operations.

70

21. By contract dated June 9, 1923, duPont and the French agreed to form duPont Cellophane Company to manufacture cellophane in the United States. Each party agreed it would not prior to December 31, 1935 except by duPont Cellophane Company become interested in any other business in North or Central America engaged in the manufacture of cellophane.

71

22. By agreement of June 9, 1923, duPont Cellophane Company was organized to manufacture cellophane in the United States. DuPont contributed $866,666.67 and received 52% of the voting stock. La Cellophane contributed its patents, processes, technical assistance, and $133,333.33, for all of which it received 48% of the voting stock.

72

23. The contribution of La Cellophane to duPont Cellophane Company in exchange for 48% of its voting stock was neither cash nor patents but its secret process and technical assistance.

73

24. On December 26, 1923, an agreement was executed between duPont Cellophane Company and La Cellophane by which La Cellophane licensed duPont Cellophane Company exclusively under its United States cellophane patents, and granted duPont Cellophane Company the exclusive right to make and sell in North and Central America under La Cellophane’s secret processes for cellophane manufacture. DuPont Cellophane Company granted to La Cellophane exclusive rights for the rest of the world under any cellophane patents or processes duPont Cellophane Company might develop.

74

25. There was no agreement between La Cellophane and duPont beyond the written agreements of June 9, 1923 and December 26, 1923.

75

26. La Cellophane had four representatives on the Board of eleven (later nine) Directors of duPont Cellophane Company.

76

La Cellophane had a minority interest and veto power over major expenditures, over obligations of the company which would alienate, mortgage or diminish the corporate assets, and over changes in the number of Directors. Similar veto powers were held by the minority over changes in the charter and by-laws.

77

27. The representatives of La Cellophane on the Board of duPont Cellophane Company attended Directors’ meetings and participated in the functions of the Board.

78

The French were most actively represented by a New York lawyer, Benjamin Paskus, and two American businessmen, Messrs. Henry Blum and Albert Blum.

79

28. In 1929 duPont purchased the shares of the French in duPont Cellophane Company, and reorganized it as du Pont Cellophane Company, Inc. In exchange for the French shareholding in the duPont Rayon and Cellophane Companies the French interests received duPont Company stock with a market value at that time of nearly $90,000,000. French interests continued their membership on the Board of duPont Cellophane Company, Inc., maintained their previous degrees of participation in the management of the affairs of the company, and technical cooperation con

*59

tinued between duPont Cellophane Company, Inc. and La Cellophane.

80

29. At the time duPont decided to enter the cellophane business it had limited technical resources useful in such business, and had no knowledge as to how to make cellophane or of the chemistry of the product.

81

It was not staffed to develop the necessary chemical and engineering techniques at a cost which would have been reasonable.

82

This information was essential to commercial manufacture of plain cellophane.

83

30. Although duPont believed it was a business risk to undertake manufacture of cellophane in the United States, success of the venture was not assured.

84

The buildings for the initial casting machines at Buffalo were designed to permit conversion to use in rayon manufacture in the event the cellophane venture failed.

85

31. In France plain cellophane was sold in sheet form for hand application in the packing of luxury items, such as perfume bottles and for decorative uses. It was sold in small volume at high prices.

86

DuPont felt while the business risks were substantial, it stood a chance ■of promoting cellophane in the United States by improving its quality and manufacturing processes so it could be sold for mass packaging uses at lower cost in competition with other flexible packaging materials already established in the American market.

87

32. Evidence shows duPont could not have developed a successful process for •cellophane manufacture in less than five to eight years and then only at very substantial cost.

88

DuPont has continued to use La Cellophane’s basic process,

89

and evidence shows the only other process commercially developed for continuous manufacture, Wolff’s casting on a wheel, was inferior in cost of manufacture and quality of product.

90

'33. Technical information which La Cellophane granted duPont Cellophane Company represented the entire knowledge gained by La Cellophane as the result of years of research in developing the process. It included designs for all machinery including the hopper and all casting machine apparatus, together with information as to chemical compositions and controls from the initial step in the formulation of the viscose solution to the ultimate product. The French disclosed through plant inspection, manuals and training of personnel both in France and in the United States all phases of their own proven production line know-how. French technicians designed the initial duPone Cellophane plant, manufactured some of the machinery in France, and supervised the operations and training of essential personnel.

91

34. Communication of the process to duPont by La Cellophane was in confidence. The process for cellophane manufacture had been kept in secrecy by the French prior to its communication to duPont by a system of fences, plant guards, passes and an effort on the part of management to maintain secrecy. Following the communication of the process to duPont Cellophane Company, both it and

*60

La Cellophane used similar means to maintain secrecy of the process and the interior of the plants.

92

35. Some information as to La Cellophane’s process became available through the patent literature,

93

but many key facts were not disclosed at any time prior to World War II and all phases of the process were kept secret by duPont until that time.

94

36. DuPont still employs the fundamentals of the secret process received from La Cellophane for continuous casting of an endless sheet of regenerated cellulose.

95

IV. The “Market Setting” in Which Cellophane is Sold.

(Findings 37-79)

37. The relevant market for determining the extent of duPont’s market control is the market for flexible packaging materials (judicial notice after examination and observation).

38. Both plain and moistureproof cellophane are packaging materials.

96

Only 6 percent of duPont’s cellophane production is sold or used for non-packaging purposes.

97

39. When cellophane was first made by duPont, wax paper, glassine, and sulphite paper were the flexible packaging materials in use. These products were established in the trade and accepted.

98

They remain today dominant materials sold for the end uses where cellophane is also employed by some packagers.

99

40. Since 1923 new types of flexible materials have been developed for packaging. These include, among others, rubber hydrochloride film,

100

moisture-proof cellophane,

101

polyethylene coated paper,

102

heat sealing glassine,

103

and polyethylene film.

104

41. From the beginning of duPont’s cellophane duPont has been aware of competition of other flexible packaging materials, particularly waxed paper and glassine, and has directed its price and sales policies toward selling successfully against these materials. This awareness is reflected from 1923 to the filing of this suit in correspondence and reports within the duPont organization.

105

42. Since 1923 there has been a growth in the use of flexible packaging materials; measured in millions of square yards, total United States production and imports of the principal flexible packaging materials has grown from approximately 4,170,000 in 1925 to 14,-720,000 in 1949.

106

This has resulted from improvements in all the materials themselves; the rapid development of self-service distribution with its emphasis upon retail packaging units, higher standards of living and increased consumption, emphasis upon protective and other health aspects of packaging, the development of new merchandising techniques and the increased utility of the

*61

materials themselves.

107

All principal flexible packaging materials have shared in this development and much of the growth of duPont’s cellophane business is due to the factors mentioned.

108

43. There is tremendous increase in packaging since the end of World War II in both transparent and non-transparent materials. Most of this increase has been in consumer-size packages.

109

44. DuPont employs sixty men in the selling of cellophane.

110

These men are trained to have technical familiarity with packaging design, with packaging machinery, including printing and bag making machines, with physical and chemical properties of the various types of cellophane, and with the distribution, costs, sales promotion and other business problems of concerns that are direct users of cellophane and of concerns that process it for resale.

111

45. DuPont sells about 55% of its cellophane direct through its own salesmen to users who package products of their own manufacture for retail distribution such as bakers, food chains, candy manufacturers, meat packers, cereal manufacturers, and tobacco companies.

112

This cellophane is sold without printing or other processing in roll or sheet form in various sizes to suit the customer’s needs.

113

Most customers run cellophane through packaging machines to wrap their products.

114

46. DuPont sells cellophane to converters who print cellophane or process it into packaging units such as bags or special wraps and in turn sell in a form for use as a primary part of a package to concerns which package their produCts.

115

About 35% to 40% of duPont cellophane is sold in this manner.

116

The same customer often buys unprinted cellophane from duPont for certain purposes and buys converted cellophane from converters for other or the same purposes.

117

DuPont sells cellophane in quantities to jobbers and to fabricators.

118

The latter use cellophane in the manufacture of non-packaging items such as straws, pressure-sensitive cellulose tape, Christmas ornaments and ribbon.

119

47. Most companies engaged in converting cellophane into bags or printed packaging material, including all of the principal converters of duPont cellophane also convert other flexible packaging materials, such as glassine, other papers, Pliofilm, polyethylene, Saran, and others.

120

The products of such a converter made of flexible packaging materials other than cellophane are sold by the same salesmen who sell the converter’s products made of cellophane, to customers who are potential users of converted cellophane as well.

121

*62

48. Most converters who handle duPont cellophane also handle other flexible packaging materials at the same time for sale for the same end uses.

122

49. Converters produce wrappers for nearly every type of customer.

123

Converters hold themselves out to the public through advertising in trade journals, as ready to serve any type of customer with any type of flexible packaging material or combination.

124

50. Concerns which purchase cellophane from duPont, or converted duPont cellophane from converters, will purchase other packaging materials (such as glassine, foil, etc.) from manufacturers of such materials and from converters of them.

125

51. In addition to duPont two companies, American Viscose Corporation and Olin Industries, Inc., also manufacture and sell cellophane throughout the United States and in foreign commerce

126

52. Sylvania Industrial Corporation was a Virginia corporation

127

organized in 1929 and began production of cellophane at a plant in Fredericksburg, Virginia in 1930.

128

In 1946 it was acquired by American Viscose Company, a Delaware corporation, which is the largest producer of viscose and of viscose rayon in the United States,

129

with assets in 1949 in excess of $222,000,-000.

130

The term “Sylvania” is used with reference to events since that acquisition as meaning the Sylvania Division of the American Viscose Company, and prior thereto to mean Sylvania Industrial Corporation.

53. Olin Industries, Inc., referred to as “Olin”, is a Delaware corporation having a place of business at East Alton, Illinois.

131

Ecusta Paper Corporation is a Delaware corporation having its principal place of business at Pisgah Forest, North Carolina.

132

Ecusta is owned and controlled by Olin and carries on the entire cellophane business of Olin.

133

Ecusta began production of cellophane in June 1951 at its plant in Pisgah Forest, North Carolina.

134

54. Manufacturers of flexible packaging materials other than cellophane promote their products by many of the means employed by duPont to promote cellophane.

135

55. Manufacturers of flexible packaging materials hold themselves out to the trade, through advertising as able to satisfy the packaging requirements of

*63

the principal customer trades. This advertising material appears in the principal packaging periodicals such as

Modem Packaging, Package Parade,

and the

Modem Packaging Encyclopedia

and in trade journals representing various end uses, such as

Bakers Weekly, The Confectioner's Journal, Food Industries National Provisioner,

etc. These advertising appeals constitute claims each material, including cellophane, has the desirable degree of protective property (against moisture, dirt, rough handling, etc.), consumer appeal and reasonable price to act as an economical merchandising medium and protective package for food and other products.

136

56. For any specific end use there is available a variety of flexible packaging materials that will satisfy the requirements of packaging a product. A number of materials can provide the combination of properties. It is solved by choosing combination of qualities and price which is considered most profitable to the purchasing concern at the time of the particular purchase. Persons who use cellophane for packaging a product regard cellophane as only one of several possible packages and often change to others on short notice

137

57. A customer for packaging materials is in the market for additional packaging material within a few weeks. All such customers are open to change from one packaging material to another at any time.

138

58. Cellophane is not a unique flexible packaging material in any functional or economic sense. In terms of uses for which cellophane is sold, and the qualities it brings to each use as a wrapping material, cellophane is interchangeable and

in fact

continually interchanged with many flexible packaging materials

139

59. The accompanying Table

140

compares, descriptively, physical properties of cellophane and other flexible packaging materials:

*64

*65

60. Users and converters of these flexible packaging materials purchase materials principally on the basis of two criteria: (a) the composite of physical properties of a particular material, and (b) the price, or cost of using, a particular material. Neither price alone nor a single quality governs selection

141

61. Different purchasers of flexible packaging materials make different appraisals of the composite of properties and the importance of cost, and make widely varied selections of materials.

142

62. Other flexible packaging materials are sold to the same customers who buy cellophane from duPont and for the same uses.

143

These materials include without limitation:

Aluminum foil

is a thin aluminum sheet. The gauges used for packaging are from .0015 to .00035 inches. The foil is used as a packaging medium. It is laminated to glassine, paper or tissue, to other films, or to cellophane. It is opaque, brilliant of surface, highly moistureproof, and readily takes a semi-permanent set, known as “dead folding”. It can be printed and like cellophane can be sealed by heat when coated.

144

Cellulose acetate

is a film made by the flowing of a solvent solution of cellulose acetate onto a large diameter, slow moving casting wheel, or metal belt. The solvent evaporates, and the dry film is stripped from the wheel or belt as it turns. The film can be made by an extrusion process. It is waterproof. It can be printed, and sealed by heat, if coated. It has a high surface gloss.

145

Cry-O-Rap

is the trade name of a film made from a modified polyvinylidene chloride resin. Its chief characteristics are chemical inertness, transparency, durability, and flexibility at low temperatures. It can be shrunk around irregularly shaped objects by application of moderate heat.

146

Greaseproof paper

is made by beating wood pulp in a vat filled with water until the fibers become saturated and gelatinous in texture. Resulting product is translucent and resistent to oil and grease.

147

Glassine

is produced by finishing greaseproof paper between highly polished metal rollers under heat and at pressure. This process develops the transparency and surface gloss which are characteristic of glassine. It is greaseproof, and can be sealed by heat, if coated. It is made moistureproof by coating and with appropriate lacquers or waxes and may be printed.

Glassine and waxed paper are the two materials which have been sold in the largest quantities in direct competition with cellophane for the longest period of time.

148

Pliofilm

is a trade name of a film produced by flowing a solvent solution of rubber hydrochloride onto a moving web. The web passes through a heated chamber, which evaporates the solvent and leaves a transparent film. Pliofilm is

*66

tough, can be stretched to 5 or 6 times its original dimensions.. It is moisture-proof, and is capable of weldtype heat sealing. Heavier gauges are cloudy. It can be shrunk around an object by application of moderate heat, and can be printed.

149

Polyethylene

film is made from a solution formed from high-pressure polymerization of ethylene gas. This solution can be cast or extruded to produce the film. Principal characteristics of the film are chemical inertness, flexibility at low temperatures, and good inherent moistureproofness. Polyethylene film is transparent, but slightly hazy.

150

Saran

is the trade name of a film made from polyvinylidene chloride.. It is characterized by strength, toughness, flexibility, transparency, and chemical inertness. It has'the highest moistureproofness of all the packaging materials.

151

Sulphite Paper

is high grade, machine-glazed paper used as wrapping, for the packaging of food and other merchandise. It is the usual basis of wrappers (e. g. paper component of cigarette pack), waxing stock (for waxed paper) and other uses where moderate strength, flexibility and good coating and printing surface is required.

152

Vegetable Parchment

is made by passing unsized raw paper through a sulphuric acid bath, and drying on regular paper machine dryers. This “parehmentizing” covers the paper with a thin layer of gelatinous cellulose which fills the interstices of the fibres and cements them into a cohesive mass. Vegetable parchment is highly greaseproof, has wet strength, and is slightly translucent.

153

Waxed Paper

is made by applying melted wax to sulphite or sulphate paper.Waxed paper is made in various degrees of transparency, and is sealable by heat. Resins are added to the wax to enhance surface gloss, heat-sealing properties and low-temperature flexibility. In the printed forms, print is usually applied prior to waxing.

154

63. There are respects in which other flexible packaging materials are as satisfactory as cellophane:

Waxed Paper

— for

an instance.

Transparency is not necessarily desirable in a wrap,

155

although waxed papers can be made with a degree of transparency.

156

Waxed paper wraps have eye appeal arrived at through gloss, opacity, and colored printing.

157

. Waxed paper is not difficult to heat-seal, and is as good as cellophane, in this respect.

158

Waxed paper runs on high speed machines as well as cellophane.

159

Better printing effects are available with waxed paper than with cellophane.

160

Waxed paper affords as good moisture protection as cellophane.

161

*67

Moistureproof coating of moisture-proof cellophane will separate more readily in contact with fats and oils than waxed paper coatings.

162

Waxed paper is cheaper than cellophane.

163

Waxed paper is superior to cellophane in resistance to rancidity-inducing ultraviolet rays.

164

Waxed paper is superior to cellophane in durability under rough handling," at low temperatures.

165

Printing is applied to waxing papers prior to coating.

166

Glassine.

Glassine is, in some types, about 90

%

transparent, so printing is legible through it.

167

Glassine affords low cost transparency.

168

Moisture protection afforded by waxed or lacquered glassine is as good as that of moistureproof cellophane.

169

Glassine has greater resistance to tearing and breakage than cellophane

170

Glassine runs on packaging machinery with ease equal to that of cellophane.

171

Glassine can be printed faster than cellophane, and can be run faster than moistureproof cellophane on bag machines.

172

Glassine has greater resistance than •cellophane to rancidity-inducing ultraviolet rays.

173

Glassine has dimensional stability superior to cellophane.

174

Glassine is more durable in cold weather than cellophane.

175

Printed glassine can be sold against cellophane on the basis of appearance.

176

Glassine may be more easily laminated than cellophane.

177

.

Glassine is cheaper than cellophane in some types, comparable in others.

178

Aluminum Foil.

Aluminum foil is most commonly used in .00035 gauge which is comparable to cellophane.

179

In .00035 gauge aluminum foil is cheaper than moistureproof cellophane in cents per 1,000'sq. in.

180

Aluminum foil after laminating' and coating is within competitive range of .the price of moistureproof cellophane.

181

Moisture resistance of coated aluminum foil, even in .00035 gauge, is comparable with moistureproof cellophane, and is one -of the selling points for aluminum foil.

182

Heat-sealing foil gives a heat-seal comr parable with cellophane.

183

Aluminum foil has dimensional stability in the presence of humidity changes, and offers protection against water

*68

absorption. Cellophane is susceptible to water . absorption and dimensional change.

184

Aluminum foil has a degree of eye appeal, and can be attractively printed

185

Foil has a dead-folding property which cellophane lacks, which enables foil to give more complete protection to the contents of a package.

186

Aluminum foil, being opaque, is superior to cellophane in resistance to rancidity-inducing ultraviolet rays.

187

Cellulose

Acetate.

188

• There is no evidence the water-insensitivity of CA is a disadvantage. This feature is the basis of CA’s superior shrink .resistance and dimensional stability.

189

,

CA is less susceptible than cellophane to softening by water, and is a superior wrap for fresh produce.

190

CA permits free passage of moisture and gases more readily than cellophane, and is a superior wrap for fresh produce, fruit, iced cakes and doughnuts, and pies.

191

CA is made in heat-sealing type, selling at the same price as ordinary CA film.

192

Improvements have been made in elimination of static electricity when running CA film on machines. Static eliminators can be obtained for as little cost as

15‡.

193

Largest producer of CA is attempting to reduce the price gap between CA and cellophane. This policy is intended to reduce a competitive disadvantage of CA and to stimulate sales.

194

CA is superior to cellophane in clarity, luster and eye appeal

195

CA is used on a variety of food and other products including: fresh produce, bacon, tomatoes, fresh meat, pies, rolls, iced cakes, laminations, window boxes. 40% of CA film made by its largest producer is sold for packaging food.

196

CA’s major competition is cellophane.

197

It is not more expensive to run CA on packaging machinery than cellophane.

198

Cry-O-Rap.

Cry-O-Rap can be shrunk around irregular objects, unlike cellophane, and for this reason is used to wrap frozen poultry.

199

Cry-O-Rap is superior to cellophane as a wrap for frozen poultry because of its durability at low temperatures.

200

Cry-O-Rap is superior to cellophane in its resistance to tearing, to water absorption, and in its dimensional stability.

201

*69

Pliofilm.

Pliofilm, although 5 or 10 points less transparent than cellophane, is not cloudy when stretched.

202

The odor of Pliofilm was a characteristic of the early years, and never a serious technical problem.

203

Pliofilm is superior to cellophane in moistureproofness, resistance to tearing and heat-sealing.

204

Static electricity can be inexpensively eliminated from machines using Pliofilm.

205

The heat-sealing range of Pliofilm is not a narrow one.

206

Pliofilm may be printed on the same presses that print cellophane.

207

Pliofilm is tough, tougher than cellophane.

208

Pliofilm is more flexible than cellophane at low temperatures

209

Pliofilm’s resistance to shrinkage and resistance to water absorption are greater than cellophane.

210

90% of Pliofilm production goes for packaging, most of this for food packaging. In this field it competes with cellophane.

211

It is not more expensive to run Pliofilm on packaging machinery than cellophane.

212

Polyethylene.

Problems in heat-sealing and machine running of Polyethylene have been solved; it is now handled' on packaging machines with no difficulty. Polyethylene has excellent heat-sealing properties. It is now printed by converters.

213

Polyethylene has only appeared commercially since World War II, and has a promising sales potential.

214

In resistance to tearing, resistance to water absorption, and dimensional stability, Polyethylene is superior to cellophane.

215

Polyethylene is more durable and flexible than cellophane, particularly at low temperatures.

216

Saran.

Saran is superior to cellophane in moisture protection, resistance to tearing, resistance to water absorption, and dimensional stability.

217

Saran can be run and heat sealed on the same model of the Hayssen machine that handles cellophane.

218

Electronic sealing can be used where heat-sealing Saran raises technical difficulties.

219

64. Fresh meat turned black in a few hours if wrapped in MSAT. MSAT 80 film was developed, with the coating applied only to one side of the film, as an answer to the technical problem posed by fresh meat. This film will hold the color of fresh meat over a period of several days, which is something none of the previous types would do.

220

*70

’65. Varieties of cellophane manufactured by duPont have different properties or degrees of the same properties. Varieties have more properties, and are .capable of more specific functions, in common with some types of glassine and other materials, than with other types of cellophane.

221

66. The principal'manufacturers of flexible packaging materials include established concerns with assets which are competent to compete for flexible packaging business. The following list. of companies indicates name, date of organization, and total assets in 1949 in thousands of dollars.

Name Date of Organization Total Assets in 1949 in Thousands of Dollars

Riegel Paper Corp................. 1873 $15,285

Rhinelander Paper Co.............. 1903 14,720

Kalamazoo Vegetable Parchment Co, 1909 29,269

Marathon Corp.................... 1909 61,888

Goodyear Tire & Rubber Co......... 1898 ' ■ 424,126

Celanese Corporation of America ..'.. . 1918 254,886

Aluminum Corporation of America... ,1888 . 525,870

American. Viscose Corp............. 1910 222,396

222

6.7. Ten companies in the United States produce glassine and greaseproof papers. Their volume of output increased since 1941 and since 1946. Dernand exceeded their ability to supply during World War II, from early 1947 to mid-1948 and from mid-1950 to November 1951.

223

68. Some of the companies making glassine, waxed paper and other packaging papers are:

224

, .

Company Material

Riegel Paper Corporation Glassine and greaseproof, waxing paper, other specialty papers

Rhinelander Paper Company Glassine and greaseproof

Westfield River Paper Company, Inc. Glassine

Deerfield Glassine Company Glassine

Paterson Parchment Paper Company ■ Vegetable parchment and greaseproof

Kalamazoo Vegetable Parchment Company Vegetable parchment and greaseproof

Marathon Corporation Sulphite and sulphate paper and paperboard

Consolidated Water Power & Paper Company Sulphite, wrapping tissue and coated papers

Fraser Companies Ltd. (owns Fraser Paper Co.) Sulphite and groundwood specialty papers

Nicolet Paper Company (subsidiary of Milprint, Inc., a major cellophane converter) Glassine

225

*71

69. There are three domestic manufacturers of cellulose acetate film: Celanese Corporation of America, duPont, and Eastman Kodak Company, and two smaller producers.

226

Celanese produces more than all others combined.

227

DuPont manufactures less than 20% of the total domestic production of cellulose acetate packaging films.

228

70. Aluminum foil is manufactured in U. S. by Aluminum Company of America, Reynolds Metals Co., Johnson Aluminum & Metal Co., Cochrane Foil Co., Republic Foil Co., Stranahan Foil Co., Kaiser Chemical & Aluminum Co., Aluminum Foils Co., and Standard Rolling Mills.

229

71. There are 300 firms in the United States manufacturing polyethylene film,

230

including Visking Corporation, Plax Corporation, Fabricon Products, Inc., duPont, and the Harwid Company.

231

DuPont manufactures less than 10% of the polyethylene film made in the United States.

232

72. Goodyear Tire and Rubber Company is the producer in the United States of rubber hydrochloride film, which Goodyear calls Pliofilm.

233

The Dow Chemical Company is" the domestic producer of Saran, and Dewey, and Almy Chemical Company is the producer of Cry-O-Rap.

234

73. All other flexible packaging materials are, like cellophane, sold direct to the packager by the manufacturer

235

and are sold indirectly through converters.

236

74. Cellophane and other flexible packaging materials are sold for packaging retail merchandise, particularly food products.

237

75. The converting business is competitive both as among converters and among alternative materials. Converters selling wraps to a certain trade compete with wraps of the same or

different

materials sold by other converters to the same trade, and business gained by one converter is denied to the rest. In addition, converters compete with each other in the development of new uses for packaging materials in trades where no packaging is used.

238

76. Elements of competition among converters include: price differentials, technical service to customer’s' production departments, merchandising' service to the customer’s sales departments, quality of printing or mánufacture of

*72

converted products, degree of protection afforded by the converted wrap to customer’s product, advertising, direct salesmanship brought to bear upon individual customers or potential customers, and degree of cooperation that can be obtained from the manufacture of the packaging materials used by any given converter.

239

77. About 4,000 converter salesmen are engaged in selling converted flexible packaging materials to customers in the food industry and other trades.

240

Most converter salesmen sell a full line of materials, but concentrate upon a single trade. Some salesmen are specialists in the baking industry, or the meat packing industry, but each salesman sells cellophane and other flexible packaging materials to his trade. Each type of wrap may be sold separately or in combination with others, according to the needs and desires of each customer at the time.

241

78. Some of the principal converters of flexible packaging materials are:

American Paper Goods Co.

Benj. C. Betner Co.

Dixie Waxpaper Co., Inc.

Dobeckmun Co.

Fabricon Products, Inc.

Forbes Lithograph Mfg. Co.

Kalamazoo Vegetable Parchment Co.

Marathon Corporation

Munson Bag Co.

Milprint, Inc.

Nashua Gummed & Coated Paper Co.

Oneida Paper Products, Inc.

Reynolds Metals Co.

Shellmar Products Corp.

Traver Corporation

Union Bag and Paper Corp.

U. S. Envelope Co.

Waxide Paper Co.

Western Waxed Paper Co.

242

None of these companies converts cellophane exclusively.

An analysis of the 1949 sales by these companies of concerted flexible packaging materials showed cellophane to be 19.3% of the total business of these companies. The other 80.7% of their sales comprised aluminum foil, glassine, Pliofilm, polyethylene, cellulose acetate, waxed paper, sulphite, vegetable parchment, a small amount of kraft paper and all combinations and laminations of these materials.

243

79. Converters sell two or more flexible packaging materials in combination to produce a particular wrap or package. Nineteen major representative converters produced the following combinations in 1949:

244

Cellophane and Combinations

Cello MT

Cello PT

Duplex Cello MT

Coated Cello, MT

Cello MT & Glassine, Window Type

Duplex Cello PT

Cello MT & Kraft, Window Type

Cello PT & Kraft, Window Type

Laminated Cello MT

Coated Laminated Cello MT

Duplex Cello MT & Glassine

Cello MT & Vellum, Paper Window Type

Laminated Cello MT to Foil

Laminated Cello MT to Kraft

Cello PT & Greaseproof, Window Type

Laminated Cello MT to Waxed Sulphite

*73

Laminated Cello MT to Opaque Glassine

Miscellaneous Cellophane Combinations

Foil and Combinations

(Except with Cellophane)

Foil

Laminated Foil to Tissue

Laminated Foil to Waxed Tissue

Laminated Foil to Glassine

Laminated Foil to Bond

Laminated Foil to Glassine to Coated Foil

Laminated Foil to Acetate

Laminated Coated Foil to Parchment

Laminated Coated Foil to Tissue

Laminated Foil to Kraft

Laminated Foil to Tissue to Tissue

Laminated Foil to Parchment

Laminated Foil to Acetate to Pliofilm

Miscellaneous Foil Combinations

Laminated Foil to Sulphite

Glassine and Combinations

(Except with Cellophane or Foil)

Glassine

Waxed Glassine

Laminated Glassine

Duplex Glassine & Kraft

Duplex Glassine & Bleached Kraft

Laminated Glassine to Kraft

Duplex Waxed Glassine

Coated Glassine

Duplex Laminated Glassine & Bleached Kraft

Duplex Glassine

Duplex Laminated Glassine & Kraft

Opaque Glassine

Waxed Laminated Glassine

Duplex Glassine & Sulphite

Laminated Glassine to Opaque Sulphite

Duplex Waxed Glassine & Sulphite

Triplex Glassine & Kraft & Kraft

Miscellaneous Glassine Combinations

Films and Combinations

(Except with Cellophane, Foil, Glassine or Other Papers)

Pliofilm

Polyethylene

Cellulose Acetate

Coated Pliofilm

Visten 10

Vinyl

Laminated Pliofilm

Miscellaneous Synthetic Films

Papers and Combinations

(Except with Cellophane, Foil or Glassine)

Waxed Bleached Sulphite

Waxed Opaque Sulphite

Waxed Kraft

Parchment

Sulphite

Kraft

Waxed Clear Transparent

Moldproofed Sulphite

Bleached Kraft

Kraft & Mesh, Window Type

Waxed Parchment

Waxed Twisting

Laminated Waxed Sulphite

Dry Waxed

Waxed Manila

Greaseproof

Duplex Kraft

Laminated Sulphite

Waxed Tissue

Duplex Kraft & Waxed Kraft

Waxed Opaque Twisting

Manila

Casein Coated Sulphite

Tissue

Duplex Wet Strength Kraft

Duplex Kraft & Asphalt Laminated Kraft

Duplex Kraft & Bleached Kraft

Coated Sulphite

Laminated Waxed Sulphite to Tissue

Waxed and Treated Sulphite

Laminated Waxed Manila

Triplex Kraft & Kraft & Kraft

Asphalt Laminated Sulphite

Waxed Bleached Kraft

Miscellaneous Papers

*74

$V 'DuPont Competed by Research 'to ■ Improve Quality and Lower Cost.

(Findings 80-122)

80. When duPont commenced sale of cellophane, it was not of a quality which would enable it to compete for flexible packaging business. Cellophane was brittle, not available in the roll form essential for machine ■ packaging operations, non-moistureproof.

245

It was necessary for duPont to engage in research to overcome these deficiencies, and, as they were overcome to continue research looking toward a quality improvement so cellophane would remain competitive with other flexible packaging materials in meeting the requirements of buyers of flexible packaging materials.

246

81. DuPont did not engage in cellophane research with the intent of monopolizing the manufacture of cellophane.

247

82. In duPont organization there were no chemists skilled in viscose chemistry. Research facilities were inadequate and research chemists were difficult to find.

248

83. DuPont by research

249

improved efficiency of its manufacture,

250

reduced cost of production,

251

improved quality of cellophane,

252

and developed new types.

253

DuPont cellophane technical activities expense totalled $24,361,065 during the period 1924-1950. Annual amounts expended for such activities by duPont increased :

254

1924 ......................$ 9,139

1931 ...............'...-....... 471,374

1939 ..................-..... 793,195

1944 ' . .v.......... 1,131,790

1949 ................-....... 2,289,507

1950 ........................ 2,782,706

84. Research projects by duPont originate in problems of sales group, from production problems in plants, or as idea of one of the. research men. Research relating to specific problems was discussed with sales, technical and production management in Wilmington before projects were-approved.

255

85. The purpose of duPont’s research has been to enable it to improve profits and to compete with other manufacturers of flexible packaging materials, including other makers of cellophane, by reducing cost, improving quality and developing types of moistureproof cellophane designed to meet specific packaging needs.

256

This research has involved developments at all stages of the manufacturing processes, and improvement in every phase of cellophane quality.

257

86. Cellophane and other flexible packaging materials are sold to and used interchangeably on packaging- machines and converters' equipment. DuPont's efforts by research to improve quality and broaden cellophane markets not only gave impetus to cellophane sales but also stimulated improvements in other materials and caused improvement in utility

*75

and acceptance of flexible packaging materials generally.

258

87. DuPont’s research to improve quality of cellophane was for purpose of enabling it to meet competition of waxed paper and glassine, and its research to reduce costs of cellophane manufacture was for purpose of lowering costs so prices might be reduced and markets broadened.

259

88. DuPont did not engage in research for purpose of blocking competitors. DuPont’s research has not been channelled into any emphasis for anti-competitive reasons.

260

89. Results of duPont’s research are reflected in manufacturing efficiency of film, and solution of problems in the use of cellophane. Following are illustrations typical of these various results.

(a)

Quality:

Uniformity of sheet flatness, which is essential to printing; and uniformity of film thickness, which is essential to production of rolls that will handle on high speed machines.

261

(b)

Manufacturing Efficiency:

Average pounds cast per casting machine day increased from 3,292 in 1931 to 9,963 in 1950; maximum casting machine speeds increased from 30 meters per minute in 1932 to 120 meters per minute in 1952; average pounds coated per coating tower day increased from 3,-956 in 1931 to 15,371 in 1950; finishing waste dropped from 15.7% in 1924 to 3.5% in 1950,

262

and solvent -recovery in-, creased from 83% to 97%.

263

(c)

New Types: ■

Basic moistureproof-' cellophane; moistureproof coatings with; greater resistance to passage of moisture; types of moistureproof cellophane-tailored for dry or humid climates;’’ types with coating anchored to permit use on wet products; special formula-: tions of moistureproof ' cellophane for ■ fresh meats, differing types of breads ■ and candies, milk bottle hoods and other specialized types.

264

(d)

Solution of Problems in the Use of ■ Cellophane:

Development of adhesives’ for sealing moistureproof cellophane; • heat-sealable coatings; improvement of-slip and other machine running characteristics; determination of type best’ suited for a particular product; deter-' mination of qualities in a wrap for a new product.

265

Research work on the ex-; ampies given in most cases was conducted over a number of years.

266

90. High speed packaging machines' require material in roll form for continuous operation.

267

Uniformity of the-rolls is important at all speeds and be-’ comes critical as speeds of the packaging' machines increase.

268

. 91. When duPont began production’ of cellophane, packaging machinery was’ in existence that handled waxed paper and glassine satisfactorily.

269

Such machinery would not handle cellophane.

270

*76

Shortly after the start of its manufacture of cellophane, duPont promoted development and use of packaging machinery that could handle both cellophane and other flexible packaging materials interchangeably.

271

This program included work with the manufacturers of packaging machinery to assist them with problems created by the attempt to use cellophane on their machines,

272

promotion of use of such machinery for cellophane by customers,

273

and technical service to customers who encountered difficulty in use of cellophane on packaging machinery.

274

The work was done by a group of mechanical engineers employed and retained by duPont.

275

DuPont’s work in the development of packaging machinery and its use has contributed to the growth of sales of cellophane.

276

92. Mechanization of wrapping enabled duPont to obtain new cellophane customers, in industries where cost of hand wrapping prohibited use of the material.

277

93. When duPont commenced manufacturing cellophane the product was not of adequate quality for sale in roll form. Since cellophane has a thickness of 1/1000 of an inch, when wound in commercial rolls of 9" outside diameter, consisting of thousands of layers of film, irregularities of thickness in cellophane as then manufactured created a lumpy, unusable roll. DuPont recognized need for roll cellophane if sales in volume were to be obtained.

278

The characteristic of cellophane for sales in rolls is uniformity of gauge to fine tolerance.

DuPont offered rolls in 1925.

279

By 1930 approximately 50% of its production was sold in roll form.

280

Not much of the production in that period would be salable today for slit rolls.

281

Currently, duPont sells 90% of its production in roll form.

282

DuPont’s development of quality rolls was for the purpose of increasing sales, and had that effect.

283

94. DuPont’s development of moistureproof cellophane was stimulated by duPont’s inability to sell non-moisture-proof cellophane in competition with waxed glassine and waxed paper for wrapping cookies, crackers, candies, biscuits and baked goods.

284

95. DuPont still strives to improve quality of its product and reduce cost of production by the application of research to its manufacturing processes.

285

96. DuPont’s sales efforts increased competition between flexible packaging materials. Through technical research and market analysis, and development of new types of film duPont was able to penetrate markets previously dominated by other materials, and to enter markets that did not use flexible wrapping materials. This stimulated technical developments by other producers of flexible wrapping materials to produce new types that would better compete in the same markets. General development of the market of flexible wrapping materials has stimulated development of new types of films.

286

*77

97. DuPont after years of development produced a type of cellophane that would retain, the natural color of fresh meat for the necessary period of sales life. In 1947, when this film was introduced, Pliofilm was unsuitable for wrapping fresh meat.

287

After duPont’s success, Goodyear was stimulated to research which resulted in development of a type of Pliofilm satisfactory for fresh meat packaging.

288

Fresh meat became one of the most important markets for Pliofilm.

289

98. Cellophane has been successful as a packaging medium. Continued success in the sale of cellophane for pack-, aging depends upon further research to improve quality.

290

99. Plain cellophane was not suitable for wrapping where moisture protection was necessary.

291

DuPont’s experience in attempting to sell plain cellophane for packaging such products as hard candies and bakery goods confirmed plain cellophane could not compete for these uses.

292

In 1924, the same year it began • production of plain cellophane, duPont commenced research to discover moistureproof cellophane.

293

This work was successful and experimental production of moistureproof cellophane began by 1926.

294

Prices for moistureproof cellophane were regularly listed for the first time in November, 1928.

295

The basic product patent on moistureproof cellophane, U. S. Patent No. 1,737,187 was issued on November 26, 1929.

296

100. Invention of moistureproof cellophane enabled sales to customers who were mass producers of low cost products requiring moisture protection.

297

These included most foods and tobacco products., Earliest of such industries was the cigarette and cigar industry, which' in the early 1930’s changed to cellophane

298

as a protective wrapper in place of waxed glassine and other materials previously used.

299

101. After invention of moisture-proof cellophane much of duPont’s research was directed to improvements of the basic product moistureproof cellophane.

300

Forty different types of moistureproof cellophane were developed by duPont.

301

Research work connected with moistureproof cellophane included development of adhesives,

302

development of coatings that could be sealed by heat without the use of adhesives,

303

development of anchoring the coating,

304

and development of coatings with special characteristics required by different

*78

products.

305

DuPont was issued patents from time to time on various of its inventions.

306

Validity of patents is not challenged.

307

102'. DuPont developed over fifty types of cellophane tailored for end uses.

308

For example, different types are manufactured for fresh vegetables,

309

for cigarettes,

310

for hot hard candies,

311

for cold hard candies,

312

for wet products,

313

for frozen products,

314

for prepared meats,

315

and for fresh meats.

316

103. Since entering cellophane, duPont has produced 174 varieties of cellophane.

317

In 1949, duPont made sales of 108 different varieties of cellophane.

318

104. Original moistureproof cellophane could not be sold for mass-produced bakery products,

319

which were packaged by machines in heat sealing materials, especially waxed paper and waxed glassine.

320

Moistureproof cellophane, since not sealable by heat, would not work on these machines.

321

Adhesives necessary to seal moistureproof cellophane had an objectionable reaction on bakery products.

322

DuPont research developed a heat sealing moistureproof cellophane by 19 32.

323

This enabled penetration of the bakery industry to which duPont had been unable to sell in volume.

324

During 1933 duPont direct sales to that industry amounted to 4,500,000 lbs.

325

and in 1934 to 7,000,000 lbs.

326

This increased over 13,000,000 lbs. in 1937, and continued to grow.

327

The bakery industry is now the largest single consumer of cellophane, accounting for 52,700,000 lbs. of duPont cellophane in 1949.

328

105. Moistureproof coatings unless anchored have tendency to slough off in the presence of considerable moisture,

329

and unanchored moistureproof film is unsuitable for packaging such products as frozen foods and fish, fresh produce, and meats.

330

Research on anchoring the coating was undertaken by duPont in 1928 to obtain a film adaptable to such uses.

331

DuPont’s research resulted in an anchored coating,

332

and research has continued for the purpose of improving quality of product and reducing cost of its production

333

A further development by duPont of a film for fresh meat opened that market to cellophane.

334

Du

*79

Pont’s research oh anchoring the moistureproof coating led to substantial improvement in duPont’s sales.

335

106. Development of anchoring for the moistureproof coating on duPont cellophane was stimulated by loss of business to glassine, resulting from loss of cellophane’s moistureproofness when the coating came into contact with greasy or wet products.

336

107. Manufacturing process obtained by duPont from the French was sound from engineering standpoint.

337

However, duPont made improvements by placing the process under control for quality purposes, improving machine efficiencies and redesigning machines to enable more continuous operation.

338

108. DuPont by its efforts made improvements in the efficiency and cost of each step in the manufacture of plain cellophane and of moistureproof cellophane. Phases of manufacture át which improvements were made include steeping the wood pulp, shredding the pulp into alkali cellulose, ripening the ■ alkali cellulose, xanthation, mixing xanthate with caustic soda to form into viscose, control and design of easting hopper and lips, handling of film through baths of the casting machine, design of rolls, drying film, application and drying of moistureproof coatings, recovery of solvent, and slitting of finished film into commercial rolls.

339

109. The amount of raw materials required to make one-pound of cellophane has been reduced as follows:

wood pulp ......................20% caustic soda.............. 40% carbon bisulphide................33% sulphuric acid...................60%

340

Finished product output per payroll hour has been increased 380%.

341

Finished'waste has been reduced from 15.3% to 3.5%.

342

; Maximum casting speeds have increased from 30 meters per minute to Í20 meters per minute in 1952.

343

Speed of film in the coating towers has increased from 30 meters per minute to upwards of 200 meters per minute.

344

- Solvent recovery has been increased from 83% up to 97%.

345

The speed at which rolls are slit increased from 150 feet a minute to 1,000 feet a minute.

346

DuPont’s productive capacity in 1941 for 56 machines was 110,000,000 pounds, while in 1952 with the same number of machines, its production capacity was 218,000,000 pounds.

347

The average pounds of film produced per casting machine day by duPont increased from 3,292 in 1931 to 5,698 in 1944 and 9,963 in 1950. Average pounds of film coated per coating tower day by duPont increased from 3,956 in 1931 to 8,107 in 1944 and 15,371 in 1950.

348

All of this indicia of the efficiency of manufacture is .persuasive.

349

110. .In the last two years there has been one lost time accident among the 4,000 employees in duPont’s cellophane

*80

plants, despite the existence of dangerous elements in cellophane manufacture.

350

111. Since duPont commenced manufacture of cellophane, it has carried out laboratory analyses of flexible packaging materials which compete for the same end uses as cellophane. These tests cover physical and chemical properties that are important in packaging.

351

They are not made with any anti-competitive intent, but for the purpose of appraising the characteristics of competing materials as a guide to improvements in duPont’s products. DuPont tries to maintain as high performance in its cellophane, relative to the performance of other flexible packaging materials, as it can.

352

112. Since invention of moisture-proof cellophane duPont has improved cellophane as to uniformity of gauge, degree of moistureproofness, ease of heat sealing, reduction of the brittleness of the film when exposed to humidity changes, and facility of operating of cellophane on high speed presses and converting and packaging machinery.

353

113. Waxed paper, glassine, Pliofilm, foil, Saran polyethylene and other flexible packaging materials have been improved for packaging use in the last 20 years. These improvements include strength, printability, ease of use on packaging machinery and variation of characteristics to serve specific uses.

354

Competition of cellophane has stimulated these improvements in other flexible packaging materials.

355

114. Improvements with respect to glassine since 1924 include:

1. An increase in strength, both bursting strength and strength when wet.

356

2. Improvement in flexibility and folding qualities so as to make it less brittle and more acceptable as a wrap for a small merchandise where creases and corners in a wrap occur.

357

3. Development and improvement of more transparent types.

358

4. Development and improvement of new coatings for glassine to provide better protection against moisture, grease, vapors, etc.

359

5. Improvement of printing.

360

6. Improvement of transparency.

361

7. Improvement in variety of types produced for- different packaging use.

362

115. Improvements in waxed paper since 1924 include:

1. Development and improvement of translucent types of waxed sulphite.

363

2. Development and improvement of highly opaque types of waxed paper for better background to printing.

364

*81

3. Development of hard crystalline waxes which are not sticky, will not rub off, and are glossy.

365

4. Development and improvement of process printing methods which enable highly decorative effects, including direct color photographic reproductions, to be obtained with waxed paper wraps.

366

5. Improvement of moisture resistance.

367

6. Improvement of ease and strength of seal.

368

116. Polyethylene film produced had disadvantages in limpness, sealability, printability and other factors.

369

Many of these deficiencies could be corrected through research,

370

and were.

371

These improvements made it an effective competitor for uses previously served by cellophane and other flexible wrapping materials.

372

117. Although duPont in January, 1949, thought cellophane was secure against competition from other transparent films for self-service merchandising of fresh meat, luncheon meats, and fresh produce,

373

in fact Goodyear in 1950 developed a type of Pliofilm satisfactory for fresh meats, which became a major Pliofilm market.

374

Polyethylene and cellulose acetate were being improved, and making increased penetrations in the fresh produce field.

375

DuPont’s development of specialized types for self-service selling of meats and fresh produce gave it a start over other materials, but improvements in the other materials enabled them to capture part of these markets from cellophane.

118. Saran, Pliofilm and polyethylene when first on the market were difficult to heat seal and run on packing machines, but are

now

heat sealed and mechanically run on a commercial basis on commonly used equipment.

376

119. Qualities of types of Pliofilm have been improved since its appearance in the 1930’s.

377

Odor has been eliminated, and the film has been made durable at low temperatures.

378

Important to Pliofilm sales are improvements in adaptability of machines to convert and package with Pliofilm.

379

Types have been developed that enabled penetration of new markets, notably fresh meat and dried fruit packaging.

380

120. Cellulose acetate has been improved as to toughness of film. Improvements have been made in handling cellulose acetate film mechanically to avoid generation of static electricity.

381

Heat sealing cellulose acetate film is now under development.

382

121. Sales of cellophane bags are vulnerable to competition from polyethylene.

383

*82

122. Other manufacturers of flexible packaging materials engage in research to improve their products and sales. DuPont does not have power to subvert use or to engross trade secrets and technical knowledge either as to cellophane or as to flexible packaging materials.

384

VI. DuPont Competed by Lowering Prices.

(Findings 123-149)

.123. The objective of duPont was to reduce price to a level where cellophane could compete with other flexible packaging materials. Price of cellophane in relation to prices of other flexible packaging materials was such that only luxury items would use it as a wrap. It was necessary to develop volume, lower cost and improve quality and bring the price of cellophane down to a point where it would receive acceptance in the packaging markets. DuPont sought a low profit per unit of sale in effort to achieve lower prices which would develop volume sales and increase profits.

385

124. From start of production of cellophane in 1924 until 1947 duPont made 21 price reductions which lowered price of plain cellophane (300 gauge) per pound from $2.65 to 330.

386

During period from the first commercial offer of moistureproof film to 1947 duPont reduced the price per pound (300 gauge) from $1.60 to 410.

387

Since 1947 duPont’s prices for these types have increased to 490 and 510, respectively, as of December 35, 195 0.

388

125. Above price reductions cellophane customers enjoyed reductions in cost of using duPont cellophane during the period 1924 to date as the result of improvement in quality of duPont cellophane

389

without any increase in price per pound.

390

126. Annual average prices received by duPont per pound of cellophane sold have been:

391

Year Average Price

1924 ' 2.508

1925 1.927

1926 1.713

1927 1.431

1928 1.211

1929 1930 1.066 .863

1931 .643

1932 .556

1933 .504

1934 .481

1935 .431

1936 .413

1937 .415

1938 .416

1939 .398

1940 .380

1941 .382

1942 .396

1943 .404

1944 .419

1945 .416

1946 .401

1947 .419

1948 .460

1949 .483

1950 .490

127. DuPont’s price reductions were made by improvement, in .efficiency of manufacturing and by increased volume

*83

of sales attained by improvements in the quality of duPont’s cellophane.

392

128. All types of duPont moisture-proof cellophane are sold at prices different from those of duPont plain cellophane.

393

129. ' Types of duPont moistureproof cellophane are sold at different prices, and have different characteristics.

394

130. 1949 average wholesale prices of flexible packaging materials in the United States were:

395

Packaging Material Price per 1,000 sq. in. (cents) Price per lb. (cents) Yield per. lb. (sq. in.)

Saran 100 Gauge #517....... 6.1 99.0

16,300

Cellulose Acetate .00088" ............... 3.3 82.0 25.000

Polyethylene .002" — 18" Flat Width.. 5.4 81.0 15.000

Pliofilm 120 Gauge N 2........ 3.8 80.8 21.000

Aluminum Foil .00035" ............... 1.8 52.2 29,200

Moistureproof Cellophane 300 MST-51 .......... 2.3 47.8 21,000

Plain Cellophane 300 PT............... 2.1 44.8 21,500

Vegetable Parchment 27# .................. 1.4 22.3 16,000

Bleached Glassine 25# .................. 1.0 17.8 17.280

Bleached Greaseproof 25# .................. .9 15.8 17.280

Plain Waxed Sulphite 25# Self-Sealing ..... ' 1.1 15.2 14,400

Plain Waxed Sulphite 25# Coated Opaque ... .7 11.9 17.280

Cry-O-Rap ............. . Sold only in converted form, converted quotations. No un-

131. December 15, 1950, the latest date for which list prices are in the record, duPont’s price for 300 gauge moistureproof heat sealing cellophane was 51# per lb.; for 300 moistureproof heat sealing anchored cellophane, 59^ per lb.; for 300 gauge non-moistureproof cellophane, 49?5 per lb.; ■ and for 300 gauge non-moistureproof rancidity resistent colored cellophane, 67?! per lb.

396

132. The price of cellophane is today an. obstacle to its sales in competition with other flexible packaging materials.

397

*84

133. Cellophane has always been higher priced than the two largest selling flexible packaging materials, wax paper and glassine, and this has represented a disadvantage to sales of cellophane.

398

134. DuPont considered as a factor in the determination of its prices the prices of waxed paper, glassine, greaseproof, vegetable parchment, and other flexible packaging materials.

399

135. DuPont, in reducing its prices, intended to narrow price differential between cellophane and packaging papers, particularly glassine and waxed paper.

400

The objective of this effort has been to increase the use of cellophane. Each price reduction was intended to open up new uses for cellophane, and to attract new customers who had not used cellophane because of its price.

401

136. The ratio between moisture-proof cellophane prices and glassine prices, and between moistureproof cellophane and waxed paper prices, diminished during 1929-1949. In January, 1929, the price of MT cellophane was seven times that of glassine; in June, 1934, 4 times the price of glassine and 4% times the price of waxed paper. In January, 1949, MST cellophane price was little more than twice that of glassine, and only twice that of waxed paper

402

137. Relationship between prices for various types of cellophane and prices for various types of glassine affects ability of the producers of the respective materials to sell their products.

403

138. DuPont’s proportion of the United States production of flexible packaging materials has increased in almost direct relation to the steady decrease of the ratio of cellophane prices to glassine and waxed paper prices.

404

139. Steady narrowing of price gap between cellophane and glassine and waxed paper enables duPont to get new marginal business from time to time, i. e., accounts who had previously not used cellophane because of its relatively high price compared to the price of waxed paper and glassine.

405

140. Some users are sensitive to the cost of flexible packaging materials;

406

others are not.

407

Users to whom cost is important include substantial business: for example, General Foods, Armour, Curtiss Candy Co., and smaller users in the bread industry, cracker industry, and frozen food industry.

408

These customers are unwilling to use more cellophane because of its relatively high price,

409

would use more if the

*85

price were reduced,

410

and have increased their use as the price of cellophane has been reduced.

411

141. The cost factor slips accounts ■away from cellophane. This hits at the precarious users, whose profit margins •on their products are low, and has been put in motion by competitive developments in the user’s trade. Examples in-•elude the losses of business to glassine in candy bar wraps in the 30’s,

412

frozen food business to waxed paper in the late 40’s,

413

and recent losses to glassine in cracker packaging

414

142. The price of cellophane was reduced to expand the market for cellophane. DuPont did not reduce prices for cellophane with intent of monopolizing manufacture or with intent of suppressing competitors.

415

143. DuPont reduced cellophane prices to enable sales to be made for new uses from which higher prices had excluded cellophane, and to expand sales. Reductions were made as sales volume •and market conditions warranted. In •determining price reductions, duPont considered relationship between its manufacturing costs and proposed prices, possible additional volume that might be gained by the price reduction, effect of price reduction upon the return duPont would obtain on its investment. It considered the effect its lowered price might have on the manufacture by others’ but this Possible result of a price reduction ^was never a motive for the reduction.

416

144. DuPont never lowered cellophane prices below cost, and never dropped cellophane prices temporarily to gain a competitive advantage

417

145. As duPont's manufacturing costs declined, 1924 to 1935, duPont reduced prices for cellophane.

418

When costs of raw materials increased subsequent to 1935, it postponed reductions until 1938 and 1939.

419

Subsequent increases in cost of raw material and labor brought about price increases after 1947.

420

146. During period 1932-35, duPont made reductions in cellophane prices, but was unable to sell productive capacity of its cellophane plants.

421

147. In May 1930, it made an announcement of a reduction and of further reductions to be effective in August and October.

422

DuPont’s principal reasons for advance announcement were to influence consumers to use up their inventories rather than to place further orders, since new productive capacity was expected to come into operation in

*86

October, 1930, and to stimulate interest on the part of users who were not interested in cellophane at the current price but would be interested in anticipation of lower future prices. The advance announcement would give anyone contemplating cellophane manufacture notice of duPont’s idea of the proper price level.

423

The price reductions made by duPont in August and October 1930 were greater than had been announced in advance.

424

When a second advance announcement was suggested in 1936, management rejected the suggestion because business conditions which impelled the 1930 announcement did not exist; i. e., in 1936 customers were purchasing only for immediate use, and not to build up inventory.

425

148. Same individuals were the prin-' cipal duPont executives in duPont Rayon Co. and duPont Cellophane Co.

426

Same policies of improving quality, lowering cost of production, and reducing unit price to gain greater volume of sales were followed as to both companies.

427

149. When duPont commenced manufacture of viscose rayon, it made a low percentage of the United States output, and for years its percentage of domestic sales was 20%. During that period its price policy for rayon was the same as for cellophane, which was the more the price could be reduced within limits the more of the article could be sold.

428

VII. Competition Between Cellophane and Other Flexible Packaging Materials.

(Findings 150-278)

150. DuPont has promoted sale of cellophane for packaging material for products previously wrapped in other materials or not packaged. Growth of cellophane industry has been due to development of new uses, rather than an increase of volume in established uses.

429

The baking industry, the tobacco industry and the meat industry, each of which accounted for less than 2% of the small total sales in the early years, have become end uses of major importance, consuming millions of pounds annually.

430

151. DuPont did not promote the sale of cellophane with intent of monopolizing the manufacture and sale of cellophane, or with intent of monopolizing the manufacture and sale of flexible packaging materials.

431

152. DuPont promoted use of cellophane under an idea of developmental sales. DuPont acted on belief to increase volume of cellophane sales it was necessary to promote it for uses where advantages to the user were sufficient to offset the price advantage of competing flexible packaging materials. From selling standpoint, duPont’s implementation of the developmental concept involved these activities:

432

(a) Reduction of price per pound to reduce cost of cellophane.

433

*87

(b) Development of packaging machinery and promotion of its use to reduce cost of application of cellophane.

434

(e) Detailed study of the products and distribution practices of industries that appeared to be potential volume users, in order to determine what characteristics . cellophane would require to function effectively, and to determine in what ways cellophane could justify its cost by increasing sales of product, reducing distribution costs for product.-

435

•

(d) Packaging development -service to assist customers in designing practical packages with cellophane.

436

(e) Technical services to assist customers in solving problems created by the use of cellophane.

437

(f) Market studies to determine purchasing habits of retail consumers of packaged products.

438

(g) Marketing studies to. determine effect on sales of packaging a given product in cellophane.

439

(h) Consumer advertising to popularize products packaged in cellophane.

440

(i) Sales and technical assistance to converters engaged in the manufacture and sale of cellophane processed for packaging purposes.

441

153. To . increase use of cellophane duPont urged installation by customers of packaging machinery, wrapping and bag making machines. Use of such machines lowered cost of using cellophane, and tended to increase amount used. Purpose of such promotion by duPont of the use of packaging machinery was to lower the cost of packaging with cellophane and to enable cellophane to compete with other materials and to encourage use of cellophane by various types of customers.

442

154. DuPont provided service to machine use of cellophane to users and prospective users without imposing obligation they purchase duPont cellophane, and without regard to size of possible purchases. Such services were rendered to persons using only Sylvania cellophane, to persons using both duPont and Sylvania cellophane, and to ■persons using no cellophane at all.

443

155. Users of flexible packaging materials redesign packages seeking new ways of advertising their products, increasing protection or reducing cost. All manufacturers of such materials compete by rendering in varying degree technical services to these users including aid in package design,

444

development of material to meet special needs.

445

156. DuPont considered as part of the future market for cellophane much of the business enjoyed by waxed paper and glassine. This is reflected in estimates by duPont of the potential for cellophane- sales.

446

157. In uses which account for 75% of'duPont cellophane sold (packaging in food industries, textiles, paper goods, tobacco products) cellophane competes with . aluminum foil, cellulose acetate, Cry-O-Rap, greaseproof paper, glassine, Pliofilm, polyethylene film, Saran, sulphite paper, vegetable parchment and

*88

waxed paper. DuPont cellophane competes with waxed paper and glassine, and with one or more of the balance of these materials in every subdivision of the food industry.

447

158. Cellophane is forced to meet competition of other flexible packaging materials. The competition between the materials is intense and duPont cannot exercise market control or monopoly powers.

159. These are elements considered by users of flexible packaging materials in the selection of a material:

1. Type of protection the contents of the package will require, e. g., protection against dirt, handling, moisture transmission, flavor contamination, etc.

448

2. Degree of protection required.

449

3. Facility of materials that satisfy considerations to run on the type of machinery operated by the user of the material.

450

4. Degree of tradition of a certain package appearance. This must be judged by the user of the material against the nature of the market in which he sells his product.

451

5. Degree of merchandising appeal.

452

6. Economy offered by various materials. Both the selling price of materials and economies or expenses resulting from their use must be weighed.

453

160. Packaging application presents problems arising from the nature of the product to be wrapped.

454

161. Manufacturer of packageable products has a choice of materials from which to choose. Purchase price, cost of application, service available, and functional qualities of each material are factors which control choice, and control volume of material that can be sold in competition with others.

455

162. Throughout the period of sale of cellophane, it has been at a price disadvantage as against flexible packaging materials of other kinds. Evidence is throughout the period of duPont Manufacture and sale of cellophane the price of cellophane, including both purchase price and cost of use, has been a factor in its competition with other flexible packaging materials.

456

*89

163. Evidence is throughout the period of duPont manufacture and sale of cellophane, it has competed with other flexible packaging materials on the basis of the composite physical properties of each material and the degree of each such property.

457

*90

164. Throughout the period of duPont sale of cellophane, as result of operation of competitive factors as between duPont cellophane and other flexible packaging materials, duPont cellophane has gained part or all of the packaging

*91

business of certain' specific accounts from other flexible packaging. materials and vice versa. Evidence is shifts of business between duPont cellophane and other flexible packaging materials'have been frequent, continuing and contested.

458

*92

165. Identical consumer products of a producer are available on the market at the same time in different packaging materials. Illustrations of this situation

*93

in the market include products such as bread,

459

candy,

460

Campfire marshmallows,

461

M & M candies,

462

Beechnut gum,

463

Kleenex,

464

Armour’s bacon,

465

General Food’s coconut,

466

and varieties of National Biscuit Company’s cookies.

467

166. As cellophane sales increased it was useful in packaging operations of smaller companies. In 1950 duPont had 5,000 customers of which only 2% were large companies, such as national bakers, cigarette manufacturers, major meat packers, etc.

468

167. Glassine

469

and waxed paper

470

are both made in a number of varieties. These types vary in transparency, opacity, moistureproofness, price, gloss, and sealability. Additional varieties are engineered for specific customers on particular orders.

471

168. Glassine offers a degree of transparency greatest per unit of cost of all packaging materials. Its degree of transparency is all that is needed and its cost is low.

472

169. Glassine and greaseproof papers compete with other wrapping and packaging materials. Cellophane is the product with which they compete directly.

473

170. Glassine and greaseproof papers are sold on the ability of the different types to furnish protective packaging for various products. This is the same approach as that of selling moisture-proof cellophane.

474

171. Eye appeal in the flexible packaging business is any appearance that arrests the eye. It is not transparency and luster of the wrap. It is obtained by printing to achieve a colorful wrapper.

475

*94

. 172 From 1924, duPont engaged in developmental selling program for the bakery industry.

476

This work contributed to duPont’s volume of sales to that industry, which has become its largest outlet. This creative selling involved:

(1) Invention of moistureproof cellophane, followed by development of a heat sealing type and of special types for different bakery products.

477

(2) Work with bakeries and machinery manufacturers to modify wrapping machines to handle cellophane and service the use of cellophane on such machines.

478

(3) Development of standard formulae for sweet dough and promotion of manufacture of sweet dough goods by bakers.

479

(4) Market research as to distribution of bakery products in retail stores and by house to house trucks.

480

(5) Engineering work on. mechanization of soft cake manufacture and on machines to wrap soft cake in cellophane or other wraps.

481

(6) Studies of the characteristics- of particular bakery products, such as doughnuts, to determine what characteristics cellophane must have to package them satisfactorily

482

(7) Comparative studies of the efficiency of cellophane, waxed paper and glassine as a wrap for bakery products.

483

(8) Energetic customer by customer selling.

484

SPECIFIC USES.

1. White Bread.

(Findings 173-189)

173. DuPont undertook promotion of cellophane for white bread in the early 1930’s and has been selling cellophane for white bread since 1933.

485

It is used to some extent for that purpose in every section, of the country.

486

DuPont’s progress has been salesmanship rather than meeting spontaneous demand, since the disadvantage of cellophane’s higher initial cost over waxed paper must be overcome by sales arguments that emphasize its ability to increase sales and the hidden savings which result from its use.

487

In 1951 duPont sold between 8,000,000 and 9,000,000 pounds of cellophane for white bread.

488

174. For packaging of white bread the wrapping material used besides moistureproof cellophane is waxed paper. Some waxed glassine is also used.

489

Waxed paper was being widely used for wrapping white bread when cellophane was first sold for this purpose.

490

Plain cellophane is not a satisfactory wrap for baked goods.

491

175. Principal obstacle to be overcome by duPont in selling moistureproof cellophane for the packaging of white bread was its price in relation to waxed

*95

paper and glassine. Depending on how the materials were used, cellophane bread wraps cost in the early 1930’s between three to five times the cost of waxed paper and from two and one-half to four times the cost of glassine. The low profit margin on white bread and the competition between bakers made the higher cost of cellophane a serious obstacle.

492

176. A deterrent to use of cellophane by a white bread baker was the lack of wrapping equipment which could mechanically apply cellophane. To use cellophane the baker had to wrap it by hand which increased his costs, or convert existing equipment to handle cellophane, or invest as much as $3,000 in a new wrapping machine designed to handle cellophane as well as the papers.

493

177. To minimize difficulty of wrapping white bread in cellophane on wrapping machines, duPont salesmen in the thirties made efforts at adapting bakers’ installed wrapping machines to handle cellophane, by modifying the behavior of the machine by piano wire.

494

DuPont engineers contributed to the development of machines which would handle cellophane or waxed paper with equal efficiency by adjustment.

495

178. Another deterrent to use of cellophane by a baker to wrap white bread was the inferior durability of cellophane and its tendency to shrink and break in dry or cold weather.

496

179. One selling point made by duPont promoting its cellophane for use in the white bread trade was its moisture protection. Many bakers found waxed paper provided adequate protection against moisture during the 48 hour turnover period allotted to white bread and did not believe there was need for moistureproofness in any greater degree.

497

180. In the thirties, duPont emphasized transparency of cellophane as a selling point. Many bakers believed glassine when wrapped closely about a loaf of- bread was sufficiently transparent to enable their product to be inspected through the wrap. Others considered transparency a disadvantage.

498

181. In the thirties white bread bakers were accustomed to the distinctive appearance of a bread wrap in their advertising. Waxed paper lent itself more readily than cellophane to the advertising practices of that trade.

499

182. To sell cellophane to white bread bakers in the face of its disadvantages vis-a-vis waxed paper and glassine, duPont had to develop a sales method which minimized high price-of cellophane. This method was to analyze distribution, production, selling costs of the baker and to associate suggested reductions in these costs with the use of higher priced cellophane.

DuPont salesmen would discover a baker who was a prospective customer, had an attenuated distribution route, and was making a low return because of high distribution costs per dollar of sale on that route. The salesmen would plan a rerouting for the baker in an effort to gain a greater volume of sale on a shorter distribution route, and tie it to the argument cellophane wraps on his white .bread would gain for him a greater volume of sale on a -shorter route. DuPont salesmen would find improper production methods in the baker’s plant produced a high proportion of badly sealed waxed paper wrappers. These loaves could not be sold either because of the appearance of the unsealed wrap or be

*96

cause the loaf would get stale. DuPont salesmen would inspect the production methods, suggest methods to improve the sealing of the wraps, and seek to persuade the baker cellophane as the wrap would produce this greater efficiency and lower production cost.

500

188. DuPont’s sales methods for promoting the use of cellophane for white bread met with success and white bread bakers were induced to use cellophane wraps for part or all of their white bread in lieu of the previously used waxed paper or glassine wraps. Many bakers switched to cellophane from waxed paper or glassine and then shifted back, having lost money either because the higher cost cellophane wraps did not increase their volume of sales or because the baker overestimated the amount of increase he could get by using cellophane and lost money on large unsold production.

501

184. White bread bakers shift from cellophane to waxed paper or glassine because of changes in the level of price of ingredients of bread: flour, sugar, shortening, etc. The profit margin in white bread can be reduced by rises in costs of these materials to a point at which the baker believes his return will increase if he shifts to a cheaper wrapping material. An example of this occurred in the mid-thirties when nearly every baker in northwest Pennsylvania discontinued the use of cellophane and reverted to waxed paper because of a 50-60fi increase per barrel in the price of flour.

502

185. A new promotion gains greater volume for one baker but tends to reduce volume of others. In many cases bakers whose business suffered, abandoned cellophane wrappers and reverted to waxed paper in order to prevent the loss of profit. This brought about losses of business for duPont.

503

186. Shifts of business between waxed paper and glassine and duPont cellophane for wrapping white bread have occurred from the early thirties up to the present. These shifts of packaging business have been caused by the operation of competitive factors stressing advantages and disadvantages of cellophane as against waxed paper and glassine, and by fluctuating emphasis, in the baking industry, upon cost savings.

504

187. Cellophane is still at a price disadvantage to waxed paper and glassine.

505

Profit margins in the white bread trade are still low and ability of bakers to use cellophane and return a profit remains in a narrow range.

506

Machines have been developed, which will wrap automatically with cellophane at high speeds.

507

Improvement of process printing of waxed paper and in the opacity of waxed paper have made waxed paper a more commercially desirable wrapper.

508

Improvements in the transparency of glassine and wax sulphite have narrowed this advantage cellophane once held over these wraps.

509

188. DuPont has promoted sales of cellophane for wrapping white bread, except that during the period of cellophane shortage from 1941 through 1948, duPont did not attempt to increase the use of cellophane for this purpose. DuPont could not supply an industry-wide demand for cellophane for wrapping white bread and stated this to the baking trade and to converters who were active in

*97

promoting printed cellophane for white bread.

510

189. Sales methods used by dúPont to sell cellophane to various trades for packaging of many different products are the same as those applied to the white bread trade. They are variations upon the central theme of attempting to persuade the individual customer cellophane packaging will increase sales of his product and his profits.

511

2. Specialty Breads.

(Findings 190-196)

190. Breads other than white, such as rye, whole wheat, raisin, etc. are known as specialty breads.

512

Flexible packaging materials used to wrap specialty breads are: Waxed paper, glassine, moistureproof cellophane, and some aluminum foil.

513

191. Prior to 1933-1934 no specialty bread was produced by wholesale bakers. DuPont, in order to provide a market for cellophane, promoted the development of specialty bread. DuPont urged production of specialty loaves by bakers, on the basis specialty loaves would be novel when introduced and could be changed to remain novel; that absence of standardization of specialty breads would permit each baker to set his own price and not have to meet the competition of a standard price and product, and specialty loaves marketed in cellophane would attain substantial volume and profit. The amount of cellophane sold for wrapping specialty bread increased from nil in the early thirties to its present volume, 15,700,000 pounds.

514

192. As sales of specialty breads increased, much of the volume of these breads was wrapped in waxed paper, glassine and aluminum foil.

515

193. Advantages or disadvantages of cellophane as against waxed paper and glassine for the wrapping of specialty breads were much the same as in the case of white bread.

516

194. Operation of advantages and disadvantages of cellophane as a wrap for specialty bread produced shifts of specialty bread bakers between cellophane and waxed paper or glassine, which have continued up to the present.

517

Considerable business duPont once built up for wrapping specialty bread in Oklahoma and Kansas has completely gone, and the bakers have gone back to waxed paper, seeking to increase their profit by cutting their costs.

518

195. Some business on specialty breads lost by cellophane to wax paper and glassine has been regained, for example in the Minneapolis area. On the other hand, certain important bakers of specialty breads such as Pepperidge Farms have never used cellophane but always waxed paper.

519

196. A proportion of the duPont cellophane sold for wrapping specialty bread is sold by converters to the bakers in printed form.

520

*98

3. Cake and Sweet Goods.

(Findings 197-204)

197. Flexible packaging materials used for wrapping cake are waxed paper, moistureproof cellophane, glassine, and cellulose acetate used as a window in paper board boxes. These materials are also used in the wrapping of “sweet goods” (coffee cakes, sweet rolls, and buns) .

521

198. In the early thirties sweet goods were not baked by wholesale bakers in any quantity. DuPont set about to create such a wholesale business as an outlet for cellophane. DuPont obtained for this purpose formulae for sweet dough and made an analysis of the market for wholesale sweet goods. DuPont sought to interest wholesale bakers in the considerable demand forecast for sweet goods, and made the formulae available to them. Result of this was the creation of a large wholesale sweet goods business and with it the creation of a considerable cellophane business for duPont.

522

199. In spite of duPont’s efforts to expand sales for packaging of baked sweet goods, it does not supply more than 50% of the packaging to this trade.

523

Of cellophane sold for sweet goods packaging, much is sold by duPont to converters, and sold to the bakers in converted form.

524

Almost all of the remainder of the flexible packaging in this field is glassine or waxed paper. Many bakers divide their packaging for sweet goods between cellophane and glassine and waxed paper, often using as much as three times as much glassine and waxed paper as cellophane.

525

200. Principal factors adverse to duPont’s sale of cellophane to wrap cake and sweet goods have been the higher cost of cellophane wrap as against wraps of other materials,

526

and improvement in transparency of glassine.

527

201. Operation of competitive factors in the baking industry enabled cellophane to take packaging business for sweet goods away from waxed paper and glassine, and has enabled the latter to take business from cellophane. These shifts have been frequent and are continuing.

528

202. A number of large bakers of sweet goods never used cellophane, including the Tasty Baking Company in Philadelphia, the most successful cake baker in the United States.

529

203. DuPont exerted efforts to develope a demand for cellophane in the house to house bakery business. Among these efforts was an analysis of selling methods used at the door by house to house bakery truck drivers. DuPont made a training motion picture for bakery salesmen, based upon these observations, which it made available to bakers. Many bakers who used the motion picture and accepted duPont’s selling suggestions, do not use cellophane, but use waxed paper, glassine and window boxes to package their products.

530

204. A special doughnut film was developed to avoid the excessive condensation of moisture within the package and the consequent sogginess of the doughnut and dissolution of sugar coating. A

*99

special cake film was developed by duPont (MST-52) to eliminate shrinking and puckering of the previously used type of moistureproof cellophane.

531

■

4. Meat.

(Findings 205-220)

205. Since 1924, duPont has sold cellophane to the meat industry.

532

The first use of cellophane in this industry was the wrapping of bacon, and other types of processed meats.

533

Processed meats continued to be the area for the use of cellophane in the meat industry, until after World War II when cellophane packaging of fresh meat for self-service food markets reached substantial proportions.

534

206. During the 1930’s and ever since, other flexible packaging materials used to wrap types of processed meat products for which cellophane was used were: greaseproof paper, vegetable parchment, glassine, waxed paper, foil and Pliofilm. Most packaging of processed meats is done with those materials.

535

207. When duPont commenced to sell cellophane for packaging of processed meats, glassine, greaseproof paper and vegetable parchment were already being used in quantity and at lower cost. DuPont had to sell in the face of this price disadvantage. Every purchaser at every stage of meat distribution purchased at as low a figure as he could, and competition in the meat industry was that of price.

536

208. When duPont was first selling an appreciable volume of cellophane to the meat industry, meat packers depended upon achieving a maximum volume of sale in order to keep a profit in the low price framework of the meat industry. Packers and wholesalers of meat had an insufficient profit margin to absorb the added cost of cellophane for processed meats, and had difficulty meeting prices of their competition if they passed the cost of cellophane along. Result was most meat packers and wholesalers could better achieve high volume of meat sales if they sold in unpackaged form or if their products were packaged in cheaper greaseproof paper, glassine, or parchment. Price disadvantage of cellophane in the meat industry was particularly severe.

537

209. Prior to World War II, between 5 and 10% of baked and smoked meats were wrapped in duPont cellophane, at the peak of duPont’s penetration of that business.

538

The pre-war peak was 1933 when duPont sold about two million pounds of cellophane for packaging smoked and processed meats.

539

Thereafter duPont’s business in this industry declined and did not again attain the 1933 volume until 1947.

540

210. DuPont was unable to hold its 1933 peak of cellophane business in the bacon and processed meat trade for these reasons: (1) Sylvania sold a sizeable quantity of second quality cellophane to the meat trade at a substantially reduced second quality price. DuPont did not sell second quality cellophane to this trade, and did not sell first quality material at a reduced price. DuPont also charged a higher price than Sylvania for shipments under 500 pounds. (2) Con

*100

verters could make converted Sylvania film available to the meat trade at a lower price than the prices of converters who purchased from duPont. (3) The use was reduced around 1935 by the introduction of a bacon package of parchment or greaseproof paper. This so-called "Platter Pack” was cheaper than cellophane and was used for a time by nearly every bacon packer in the United States.

541

211. During the mid-thirties duPont made a market study of the meat industry to discover opportunities for sales of cellophane. The cost emphasis of the meat industry’s distribution system, lower prices of other flexible packaging materials and lower prices charged by Sylvania and its converters made duPont conclude there was no opportunity to expand sale of cellophane in that industry.

542

212. The growth of duPont’s cellophane sales to the meat industry from the low point of the mid-thirties to the present rate of 19,000,000 pounds annually is attributable to the rise of self-service retailing of fresh meat.

543

213. The growth of cellophane sales for wrapping self-service fresh meat did not commence until after World War II. Prior to that, obstacles to development of this outlet for cellophane were: (1) lack of a type of cellophane that would hold the color of red meat for a 72 hour turnover period; (2) design and development of refrigeration cases for the display of packaged meats had received no attention from refrigerator companies; (3) consumers were bound by habit of butcher service, and there was no consumer acceptance of selling fresh meat by display and self-service of package cuts.

544

214. DuPont experimented with wrapping fresh meat cuts in cellophane in cooperation with retail stores, and collected information from this work, on it to base improvements in the cellophane, refrigeration, and retailing. Self-service retailing of other types of food had increased by 1940, and self-service retailing experiments for fresh meat cuts wrapped in cellophane were successful at that time, though the refrigeration equipment was makeshift. In the early 1940’s duPont developed a type of moistureproof cellophane specifically designed to hold the color of fresh meat for 72 hours, and enable it to be wrapped for self-service selling in retail stores. DuPont then induced retailing organizations to install equipment for testing this method of retailing meat, and cooperated with these organizations in training employees, designing installation, revising accounting procedures, achieving uniformity of cut. There are now 42,000 stores in the United States that sell fresh meat only by self-service, in packaged form. Prior to World War II, there were none.

545

215. Since acceptance of self-service retailing of fresh meat in packaged form, duPont has lost a considerable proportion of such packaging business to Goodyear’s Pliofilm. Shifts of meat retailer’s packaging business occur between duPont cellophane and Pliofilm continually, and Pliofilm is increasing its proportion of this packaging business. Specific retailing accounts, e. g., the A & P, Safeway, American Stores, have increased their proportionate use of Pliofilm, though they continue to use Pliofilm and duPont cellophane concurrently.

546

216. Pliofilm’s acceptance as a self-service meat wrap is attributable to certain characteristics: (1) It is tougher than cellophane. This reduces the cost to the retail store of rewrapping cuts on

*101

which the wrap has broken. (2) A single type of Pliofilm can be used for red meat, luncheon meat, cheese, etc., as against three different types of cellophane. This makes the job simpler for the wrapping crew, and eliminates wrapping cheese or meat in the wrong type of film. (3) Cellophane used for wrapping fresh meat is coated on only one side. The coated side of cellophane must be kept away from the meat, or else the film will lose its protective properties and the meat will discolor. In the case of Pliofilm, either side may be wrapped next to the meat. This again makes for a simpler wrapping job and eliminates the cost of spoilage and rejects. The somewhat higher price of Pliofilm is offset by economies resulting from these physical characteristics.

547

217. During the year 1951, the amount of Pliofilm used for self-service meat wraps was approximately 30 to 40% of the quantity of duPont cellophane used for the same purpose.

548

218. Materials used today to package processed meats and bacon are: Saran, Cry-O-Rap, Pliofilm, cellulose acetate, polyethylene, greaseproof paper, cellophane, parchment, glassine, and waxed paper.

549

Most of the meat sold in the United States is sold through stores where meat is not on a self-service basis.

550

The use of greaseproof paper, waxed paper, and glassine for processed meats is heavy in these non-self-service stores.

551

There is acceptance in self-service stores of bacon packages made of paperboard and glassine, completely opaque.

552

219. DuPont developed different types of moistureproof film in the early 1940’s which had the correct degree of moistureproofness to enable luncheon meats and frankfurters to be packaged.

553

These items had never before been packaged because packaging materials then available had too much moistureproofness and turned the meat slimy, or else had too little moistureproofness and permitted it to become dried out.

554

220. There is competition between converters for the business of converted wraps for meat and meat products. Armour and Company have purchased cellophane meat wraps from Daniels, Shellmar, Cellu-craft, Milprint, Inc., Traver Corporation, Standard Cap and Seal, Marathon Corporation, and Wraps, Inc. There is no uniform pattern of prices as between converters of any given type of wrap.

555

5. Candy.

(Findings 221-233)

221. Flexible packaging materials used for packaging by the candy industry are: Glassine, waxed paper, cellophane, greaseproof, aluminum foil, Pliofilm, cellulose acetate and polyethylene.

556

222. 40% or more of the production of the candy industry is accounted for by chocolate or chocolate coated candy bars.

557

223. In the early thirties duPont was able to obtain a volume of business in cellophane candy bar wrappers. This business was in the form of printed wrappers. Most important brands of

*102

candy bars, in volume of business, were wrapped in duPont cellophane. These candy bars had previously been wrapped in glassine and duPont obtained this business by displacing the glassine wrap in favor of printed wraps of its own cellophane.

558

224. Obstacles to sale of cellophane by duPont for use as candy bar wrappers have been: (1) higher price of cellophane as against glassine; (2) desirability in the candy bar trade of a highly printed “billboard” type of wrap; (3) transmission of light through a cellophane wrap tends to turn chocolate gray; (4) in the early days of duPont’s candy bar wrap business, wrapping machines were not available to handle cellophane, and cellophane wraps had to be applied by hand, adding greatly to the cost of production.

559

225. DuPont was unable to maintain its early volume of candy bar wrap business, and the major brands of candy bars in the United States returned to printed glassine wrappers.

560

None of the major sellers in the candy bar field are wrapped in cellophane today although certain brands of candy bars are still wrapped in duPont cellophane, e. g., those made by the Elmer Candy Company of New Orleans, Donaldson Chocolate Company of Kansas City and General Foods Corporation of New York.

561

Gains and losses of candy bar business between duPont cellophane and glassine continue.

562

226. In recent years duPont developed some cellophane business in the overwrap of cardboard trays containing a number of chocolate bars. These are sold in food stores as “take-home packages.”

563

227. Shifts of business occurred and still do between duPont cellophane and aluminum foil in segments of the candy industry. These include: (1) candy bars,

564

(2) seasonal specialties such as Easter candies and chocolate Easter eggs,

565

( 3) mints,

566

(4) Lifesavers and other packages.

567

228. Moistureproof cellophane has displaced some waxed paper and vice versa in the wrapping of plastic types of candy such as kisses and caramels, and certain children’s penny goods such as lollipops. Shifts of business are frequent.

568

229. Manufacturers of this type of candy goods have frequently discontinued cellophane for a period because profits could not stand the higher price of the cellophane wrap.

569

230. In the early years of duPont’s efforts to sell cellophane for the low priced line of candy goods, kisses and caramels were individually wrapped by machine in waxed paper. Volume of this class of goods prohibited hand wrapping in cellophane, and this business was obtained by duPont only after development of wrapping machines that would handle cellophane.

570

*103

231. In 1938, duPont believed maximum volume of cellophane possible was being sold to the candy industry as it was then conducted, with no prospect of new uses for cellophane. It decided to attempt to increase the volume of cellophane sales to the candy industry. It found food stores provided the greatest human traffic of any type of retailing outlet, and held the greatest promise as a new candy market. Since most food stores did not then carry candy, duPont made a market study of the kind of candy that would sell, the size of package that would sell, and the price at which it would sell in greatest volume. The price range of 19 to 290 per package was found to be promising. This range eliminated high priced box candy and indicated packages of cheaper types of candy were best prospects for home consumption. DuPont presented the results of this market study to candy manufacturers and to food stores, and recommended cellophane packaging for this type of unit. Sales of candy expanded as a result. This market development was largely responsible for the growth of duPont cellophane sales to the candy industry to the present figure of 20 million pounds annually.

571

232. DuPont did not gain all of the food store business for candy packages. Glassine, aluminum foil, and cellulose acetate window boxes are all used to wrap types of candy sold in food stores.

572

233. Moistureproof cellophane, Pliofilm, polyethylene, aluminum foil, and glassine are all used for packaging hard candies,

573

and business for this type of wrapping is lost and gained between each of these materials and cellophane.

574

6. Crackers and Biscuits.

(Findings 234-243)

234. The cracker and biscuit industry is divided into the sponge cracker trade and the sweet cracker trade. The former includes soda crackers such as Saltines and Ritz, and the latter includes sweet biscuits and crackers such as vanilla wafers, cookie sandwiches, ginger snaps.

575

235. Since early 1930’s some sweet crackers and biscuits have been packaged in moistureproof cellophane bags, and the majority in cartons lined with glassine or waxed paper and overwrapped with printed sulphite paper. Some cartons have been overwrapped in cellophane. DuPont has taken packaging business from other materials for certain cracker and biscuit accounts and has lost business back to these materials. Customers package part of their production of specific sweet goods in cellophane packages and the remainder of their production of the identical goods in other flexible packaging materials.

576

236. In duPont’s effort to sell cellophane for wrapping sweet crackers it encountered obstacles; (1) Cellophane cost the cracker and biscuit manufacturer more than glassine liners or sulphite carton overwraps. (2) Machines were in use for packaging with glassine, sulphite and cartons, but not with cellophane.

577

In this period (early 1930’s) these factors limited duPont’s sales for wrapping sweet crackers and biscuits to relatively high priced lines of goods.

578

Durability of cellophane was poor and frequency of breakage of cellophane bags and overwraps of sweet cracker packages was high.

579

*104

237. Factors described caused loss of cellophane business for duPont to other flexible packaging materials. Some of this business has been regained. Cellophane is still at a price disadvantage; cellophane bags still must be filled by hand; the introduction of lithographing and process printing on sulphite and waxed paper has increased acceptance of those materials in the trade. All factors continue to cause losses of business for duPont in the cracker and biscuit industry, although some of it has been regained.

580

238. To displace glassine, waxed papers and sulphite wrappers and liners on sweet goods, duPont made an effort to sell cellophane for the packaging of sweet crackers which were then sold in bulk, and displayed in large cartons known as caddies. These accounted for 65% of the sweet cracker business in 1931.

581

This type of selling was prevalent until 1938, at which time duPont had about two million pounds of business annually in cellophane overwraps and liners for sweet crackers and biscuits.

582

DuPont persuaded a substantial part of the cracker and biscuit industry and its retailing outlets to adopt display fixtures for sweet crackers and cookies to afford permanent display of these products and recommended cellophane packaging to promote display. Much of the sweet crackers previously sold in bulk were sold from these display fixtures.

583

When self-service food merchandise became general a few years later these display factors for crackers and biscuits remained as part of the self-service arrangement.

584

Today bulk selling of sweet crackers and biscuits has been eliminated, and cellophane bags, cellophane-wrapped trays, glassine lined trays overwrapped in Saran, printed and unprinted waxed paper, sulphite, glassine, foil and Pliofilm are used to package consumer size units.

585

239. Until 1947 duPont’s sales of cellophane for the packaging of sponge crackers, i. e., soda crackers, saltines, etc., were limited to cracker carton over-wraps. This business depended upon the displacement of waxed paper over-wraps.

586

Shifts of business have occurred back and forth for specific accounts such as Keebler-Weil Biscuit Company and Union Biscuit Company between duPont cellophane and waxed paper carton overwraps.

587

240. In recent years development of process printing on waxed paper and improvements in waxed paper coatings have become factors in the overwrapping of cartons of sponge crackers and sweet biscuits.

588

DuPont has lost cellophane business in this trade to waxed paper for this reason.

589

241. In 1947, duPont sold its first account for the use of cellophane for “fractional packaging” of sponge crackers.

590

Fractional packaging is the division of the contents of a carton into halves or quarters, each of which is separately wrapped, so that the opening of the carton exposes only a fraction of the contents.

591

DuPont tried unsuccessfully to get this method of packaging adopted for nearly twenty years prior to 1947.

592

At the present time about 26 cracker and biscuit bakers have a

*105

fractional packaged soda cracker on the market.

593

Other items such as graham crackers have been similarly packaged.

594

DuPont estimates about two million pounds annually of its cellophane goes into fractional packaging of crackers.

595

The principal flexible packaging materials used for fractional packaging of crackers and biscuits are waxed glassine and waxed paper.

596

A small percentage of fractional packaging crackers and biscuits are wrapped in duPont cellophane. Certain individual cracker manufacturers use more waxed glassine for fractional packaging than duPont’s total sales for that purpose.

597

242. Profit margins are narrow and price competition intense in the sponge cracker business.

598

As any cracker manufacturer reduces price others follow to remain competitive and give up cellophane for fractional packaging in favor of a cheaper material, e. g., a recent price reduction of National Biscuit Company forced a general reduction of saltine prices and duPont received cellophane order cancellations from several accounts.

599

243. Certain cracker manufacturers began using glassine for fractional packaging during the postwar cellophane shortage because of the unavailability of cellophane. By April of 1952, when cellophane was in ample supply, those accounts had not been won over to cellophane.

600

7. Frozen Foods.

(Findings 244-250)

244. The frozen food and vegetable industry is of recent origin. In the early thirties when cellophane was first used on frozen food packages, Birdseye was the packer. A few additional concerns entered this business prior to World War II, but the industry grew slowly. During World War II the frozen food and vegetable packing business grew with emergence of dozens of major concerns, to a point at which it became one of the largest process food industries in the United States. Its growth is continuing.

601

245. Cellophane is used in the frozen food industry for direct wraps or liners inside a carton, for carton overwraps and for direct wraps used alone. As a liner or direct wrap inside a carton it is used for frozen fish filets

602

and small consumer units of frozen fruits and vegeta bles.

603

It is used as an overwrap for cartons of frozen fruits and vegetables.

604

Cellophane is used as a direct wrap for frozen poultry.

605

246. Cellophane has displaced some vegetable parchment as a direct wrap for frozen fish, and vice versa. Shifts of business continue between cellophane and parchment for this use.

606

247. Waxed paper has displaced cellophane in some instances as a carton overwrap for frozen fish filets, and vice versa. Displacement continues back and forth in important fish packing accounts.

607

*106

248. Birdseye (now a division of the General Foods Corporation) adopted cellophane on its frozen foods packages in the early thirties. For a period after that time duPont cellophane was used in 100% of the frozen food packages sold in the United States. To get this business duPont cellophane displaced waxed paper which Birdseye had previously used.

608

With growth of the frozen food industry during World War II converters of cellophane developed a highly attractive multi-colored process printed opaque cellophane carton overwrap which became widely accepted in the industry by such leaders as Libby McNeill and Libby, Dulany, Pictsweet and others,

609

displacing cellophane.

249. DuPont cellophane was once used to wrap 100% of frozen poultry. Displacement of much of this business has been effected by polyethylene, Pliofilm, and Cry-O-Rap. Among accounts who shifted to one of these films from cellophane for the wrapping of frozen poultry are the “Big 4” meat packers: Swift, Armour, Cudahy and Wilson.

610

250. In the late 1940’s, waxed paper manufacturers and converters developed waxed paper with a “hard wax” coating containing a polyethylene resin. This wrap is glossy, durable and resistant to moisture and liquids. It is a great deal cheaper than cellophane. Simultaneously converters developed process printing methods on this type of paper, which made a wrap of this material indistinguishable from printed cellophane. This wrap was widely accepted in the frozen food industry as a carton overwrap for fruits and vegetables, because of its low cost,

611

its ability to be handled at higher machine speeds than cellophane,

612

and for its great decorative

613

and protective qualities.

614

The polyethylene wax wrap has largely displaced cellophane in five of duPont’s largest frozen food accounts.

615

DuPont is attempting to regain this business and still holds the business of certain other accounts of this type of wrap.

616

8. Potato Chips, Pop Corn and Snacks.

(Findings 251-253)

251. Flexible packaging materials used as wraps for potato chips, popcorn and cocktail snacks of various types are: waxed paper, glassine, aluminum foil, moistureproof cellophane, and Pliofilm.

617

252. Cellophane has displaced other flexible packaging materials with certain accounts for packaging snacks and. has been displaced by them in other cases. This displacement back and forth continues.

618

253. Obstacles to sale of cellophane as wraps of bags for potato chips and other types of “snacks” have been: (1) higher price of cellophane over waxed paper and glassine; (2) passage of ultraviolet rays through cellophane which produces rancidity in the oils used in the packaged product. This latter obstacle has been particularly severe in the case

*107

of potato chips.

619

Aluminum foil does not permit the passage of any light, and waxed paper and waxed glassine can be made opaque to prohibit rancidity effect of ultraviolet rays.

620

9. Cereals.

(Findings 254-255)

254. Flexible packaging materials used as cereal wraps are glassine, waxed paper, and cellophane both as liners and overwraps.

621

Aluminum foil is also used for packaging a small quantity of cereal.

622

255. DuPont had little success in selling cellophane for use as a cereal package. Obstacles to the sale of cellophane as a cereal wrap have been: (1) higher price than waxed paper or waxed glassine; (2) major cereal producers found cellophane gave less satisfactory protection against either moisture or rancidity than did wax paper; (3) cellophane bags required more cumbersome filling methods; and they stacked poorly on display shelves.

623

10. Fresh Produce.

(Findings 256-258)

256. Flexible packaging materials used for packaging of fresh fruits and vegetables are cellophane, cellulose acetate, polyethylene, Pliofilm, glassine and parchment.

624

Acetate is used for the wrapping of spinach, tomatoes, and certain other green vegetables.

625

Poly-

ethylene and Pliofilm are used for packaging vegetables and fruits in package sizes up to five or ten pounds.

626

257. Cellophane has displaced cellulose acetate for the packaging of fresh produce such as spinach and tomatoes in some instances and cellulose acetate has displaced cellophane in others.

627

On the West Coast, cellulose acetate is used to package 100% of packaged spinach. On the East Coast it is not used in any quantity to package spinach.

628

258. Certain types of fruits and vegetables are packed in consumer-size units by the grower in quantities in lieu of shipment in bulk and packaging by the retailer. In these cases cellophane has been displaced by polyethylene and Pliofilm. These durable materials are superior to cellophane for shipment at low temperatures for long distances, and for handling without breakage during long shipments. A shift from retail packaging by retailer, or wholesaler to packaging by the grower frequently involves displacement of cellophane by polyethylene and Pliofilm. This development is taking place in the case of carrots and apples.

629

11. Paper Goods and Textiles.

(Findings 259-260)

259. Flexible packaging materials used for wrapping paper goods (tissues, paper napkins, paper tablecloths, cups, etc.) are waxed paper, glassine, cellophane, sulphite, and cellulose acetate.

630

*108

260. Principal flexible packaging ma terials used to wrap textiles are cellophane, Pliofilm, polyethylene and glassine.

631

Obstacle to the sale of cellophane for wrapping of heavy textiles such as sheets, blankets and pillow cases is absorption of moisture by the hydroscopic textile in the package and consequent shrinkage and breakage of the cellophane wrap as it dries out. Polyethylene and Pliofilm combine a higher degree of toughness with less tendency to shrink, and have found increasing acceptance for the wrapping of heavy textiles, displacing much cellophane.

632

12. Cigarettes.

(Finding 261)

261. Cellophane was first accepted as an overwrap for cigarette paper-foil package for novel appearance, lending itself to a large advertising campaign.

633

Glassine had been used.

634

Since general acceptance of cellophane as a cigarette package overwrap, there have been periods of its displacement: a period of cellophane shortage in the mid-forties, and merchandising experiments of the Brown and Williamson Tobacco Company who, for a period, sold Kools and Raleigh cigarettes in a one-piece foil package.

635

Manufacturers of Pliofilm, glassine and aluminum foil have made and continue to make determined efforts to displace cellophane as a wrap for cigarettes.

636

13. Butter.

(Finding 262)

262. DuPont in the mid-thirties made a selling effort in the butter industry. This met with no success, since butter in contact with cellophane tended to separate the coating and because the butter industry could not pass the higher cost of the cellophane wrap on to dealer. DuPont is attempting to sell cellophane as a butter wrap. Vegetable parchment and aluminum foil have been and are the materials used as a direct wrap for butter.

637

14. Chewing Gum.

(Findings 263-264)

263. Flexible packaging materials used for the packaging of chewing gum are: aluminum foil, waxed paper, cellophane, laminations of aluminum foil and waxed paper, and laminations of aluminum foil to cellophane or to waxed paper. These materials carry a variety of printed effects and coatings.

638

264. Chewing gum packages are shifting to an opaque outer wrapper.

639

This opacity is achieved by a solid overprinting of cellophane film, and in other instances by using opaque foil or paper. Producers of foil, waxed paper and cellophane have attempted to promote package designs upon converters and chewing gum manufacturers which utilize a maximum of their material.

640

Increase of one material is at the expense of another.

641

*109

15. Other Food Products.

(Findings 265-273)

265. Other food products on which cellophane is used as a packaging material are: powdered drink mixes, macaroni, noodles, rice, dried fruits, dried vegetables, cheese, cake mixes, sandwiches. For each of these products other flexible packaging materials are used. In each case duPont must sell against a physical property of another packaging material, against lower cost of another material, or against both.

642

266. Noodles and macaroni have been sold in cellophane bags, Pliofilm, paper wraps and window boxes.

643

Cellophane bags have been displaced by specific accounts wholly or in part by window boxes.

644

Many accounts prefer window boxes because of lower breakage, and because of their more regular shape <and facility of use on display counters.

645

267. Dried fruits are packaged in blocks wrapped in Saran film, moisture-proof cellophane or Pliofilm, and in cartons overwrapped with waxed paper,

646

and sometimes lined with glassine or greaseproof paper.

647

268. Shifts of specific accounts between cellophane and other flexible packaging materials have occurred and now occur for the packaging of dried fruits.

648

DuPont’s business in this end use was gained from glassine.

649

269. Saran film is preferred by dried fruit packers to cellophane for its superior moistureproofness, although Saran is more costly.

650

Pliofilm is preferred by many for the soft appearance it imparts to the contents of the package.

651

Cellophane costs less than either Pliofilm or Saran film and is preferred by many packers for that reason.

652

270. DuPont developed a Saran coated cellophane film “K-202” in order to provide the dried fruit trade with a film that can compete with Saran and Pliofilm in moisture resistance.

653

K-202 is also used for wrapping certain types of cookies and other products that absorb moisture readily

654

271. Rice is packaged in cartons, paper bags, cellophane bags and window boxes. Shifts of business for packaging of rice have occurred between duPont cellophane and various forms of rice packaging

655

272. Dried vegetables are packaged in laminated foil, Pliofilm, Pliofilm and paper laminations, cellophane, cellophane and paper laminations, depending upon degree of transparency desired, degree of protection against moisture required, display conditions, and other factors of choice.

656

273. Powdered mixes including cake mixes, dessert mixes, and beverage mixes have been packaged in foil, foil and

*110

paper laminations, cellophane pouches, glassine pouches, cartons lined with a glassine bag and glassine laminations.

657

Some accounts have displaced cellophane for powdered mixes because of the moisture resistance of foil or a glassine,

658

others because of the breakage of cellophane.

659

These are factors against which duPont must sell for that use.

16. Other Tobacco Products.

(Findings 274-275)

274. Aluminum foil and moisture-proof cellophane are both used for the wrapping of individual cigars. Both afford protection against moisture loss of the cigar, and accounts have been gained and lost by duPont cellophane from and to aluminum foil.

660

275. Glassine, waxed paper, sulphite and cellophane have been used for packaging of smoking and chewing tobacco.

661

Major obstacles to sale of cellophane for this use is its high cost in relation to cost of waxed paper and glassine, and the superior production facility of glassine and waxed paper on wrapping machines. Accounts have been regained and lost by cellophane from and to these materials. Recently Pliofilm has been adopted on some tobacco packages for its lack of shrinkage and consequently the superior appearance of the package.

662

17. Cheese.

(Findings 276-277)

276. Flexible packaging materials used for the packaging of cheese include: cellophane, a converted cellophane coated with a rubber wax compound, Pliofilm, glassine, aluminum foil, lead foil and Saran.

663

277. Processed cheese was once wrapped in tin foil or in aluminum foil but this wrap has been displaced by a rubber coated opaque cellophane cheese wrap.

664

American cheese is wrapped in Pliofilm, Saran or cellophane.

665

Swiss cheese is generally wrapped in transparent cellophane.

666

Cream cheese and Camembert cheese are generally wrapped in aluminum foil. Cellophane has been tried for the wrapping of crearrfi cheese and Camembert but has been displaced by aluminum foil.

667

18. Oleomargarine.

(Finding 278)

278. Oleomargarine is wrapped in aluminum foil, greaseproof, and vegetable parchment applied directly about the quarter pound bars. Aluminum foil dominates

668

recently printed cello

*111

phane has been adopted on certain brands for a full pound overwrap. DuPont had attempted to gain acceptance of this wrap for years and has succeeded only in 1952.

669

VIII. Results of duPont’s Competition With Other Materials

(Findings 279-292)

279. During the period duPont entered the flexible packaging business, and since its introduction of moisture-proof cellophane, sales of cellophane have increased.

670

Total volume of flexible packaging materials used in the United States has also increased.

671

DuPont’s relative percentage of the packaging business has grown

672

as a result of its research, price, sales and capacity policies,

673

but duPont cellophane even in uses where it has competed has not attained the bulk of the business, due to competition of other flexible packaging materials.

674

280. Of the production and imports of flexible packaging materials in 1949 measured in wrapping surface, duPont cellophane accounted for less than 20% of flexible packaging materials consumed in the United States in that year. The figures on this are:

675

Thousands of Square Yards

Glassine, Greaseproof and Vegetable Parchment Papers..... 3,125,826

Waxing Papers (18 Pounds and over) ...................... 4,614,685

Sulphite Bag and Wrapping Papers ....................... 1,788,615

Aluminum Foil............... 1,317,807

Cellophane ................... 3,366,068

Cellulose Acetate............. 133,982

Pliofilm, Polyethylene, Saran and Cry-O-Rap ............ 373,871

Total ................ 14,720,854

Total duPont Cellophane Production .................... 2,629,747

DuPont Cellophane Per Cent of of Total United States Production and Imports of These Flexible Packaging Materials 17.9%

281. 80% of cellophane made by duPont is sold for packaging in the food industry. Of this quantity, 80% is sold for packaging baked goods, meat, candy, crackers and biscuits, frozen foods, fresh vegetables and produce, potato chips, and “snacks”, such as peanut butter sandwiches, popcorn, etc. A small amount is sold for wrapping of textiles and paper products, etc. Largest nonfood use of cellophane is the overwrapping of cigarette packages.

*112

The breakdown of duPont cellophane sales for the year 1949 was

676

Sales Use (M pounds) % of Total Sales

Tobacco

Cigarettes .................... 20,584 11.6

Cigars ....................... 3,195 1.8

Other Tobacco................ 1,657 0.9

Total .................... 25,436 14.3

Food Products

Candy & Gum................. 17,054 9.6

Bread & Cake................. 40,081 22.5

'Crackérs & Biscuits............ 12,614 7.1

Meat......................... 11,596 6.5

Noodles & Macaroni........... 2,602 1.5

Tea & Coffee................. 1,380 0.8

Cereals....................... 2,487 1.4

Frozen Foods................. 5,234 2.9

Dried Fruit................... 333 0.2

Nuts ......................... 2,946 1.7

Popcorn & Potato Chips....... 6,929 3.9

Dairy Products ............... 3,808 2.1

Fresh Produce................ 4,564 . 2.6

Unclassified Foods ............ 8,750 4.9

Total .................... 120,478 67.7

Miscellaneous

Hosiery ...................... 1,370 0.7

Textiles ...................... 3,141 1.8

Drugs ........................ 1,031 0.6

Rubber....................... 317 0.2

Paper ........................ 2,736 1.5

Unclassified ..................

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