Appendix — Continental Baking Co. v. Federal Trade Commission

il.

‘APPENDIX A

UNITED STATES COURT OF APPEALS-FOR THE NINTH CIRCUIT

~ J e i 4

No. 19,325...

Sareway Srorzs, [ncorporaTep, CoytiInENTAL Baxtne Co.,

Bucwan Baxine Co., and Gavess S. Bucwan,.LANGENDORF

UNtIrep. BAKERIES, Ino, Hansen Bakine Company, Inc.,

- and Ricwarp.Hoyrt, Petitioners,

v.

‘Frapamat. TRADE. Counusr0N, mubpeneent,

[September 14, 1966]

Petitions To Review an Order ‘of the 2

Federal. Trade Commission

.-

)

Before: MERRILL, Brown, and Exy, Circuit J udges

Ezy, Circuit J udge:

_ Petitioners seek review of a cease and desist order issued —

by the Federal Trade Commission (FTC).. The order re-

lates to unlawful price-fixing acts and practices found to

_ have been committed by the petitioners and others in the

sale of bread. The FTC made and entered the challenged

order under the authority of section 5(b) of the Federal

Trade Commission Act, 15 U.S.C. §45(b). Our power of

judicial review is conferred by section 5(c) of the Act. -

‘The petitioners are Continental Baking: Company, Lang-

endorf United Bakeries, Inc., Hansen Baking Co., Inc.,

Safeway Stores, Incorporated, and Richard Hoyt, an offi-

cer of Hansén.. A number of others were involved in the

proceeding, and while the order was directed against: them

also, they have not sought review.’ They were held with .

petitioners here, to have engaged i in a. conspiracy wrong-

1 Petitioners Buchan Baking Co. and George S. Buchan, named

in the heading, filed petitions but have offered no briefs in onners

of their position.

2

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fully, to fix and regulate the price of bread 1 in the general ©

vicinity of Seattle, Washington.

Three of the petitioning baking companies, hades with

nearly all others who were charged in the Commission ~

proceeding, were members of .a voluntary organization

- ealled Bakers of Washington, Inc. This corporation, of .

_ which the petitioner Hoyt was vice-president, was” also

- named .as a respondent. It was initially incorporated in

1936 in the State of Washington under the name of Bakers

of Western Washington, Inc. In August, 1987, the cor-

porate name was changed to its present name. Bakers’

members are classified by division ‘according to geograph-.

ical location. In.September, 1961, fhere were fifty-nine

members. More than half of these had places of business

in Seattle, but divisions of the association were also located

in other Washington cities, Aberdeen, Yakima,.Bellingham,

and Tacoma. All dtes were paid to Bakers in Seattle. Both ©:

wholesale and retail bakeries were included in the member-

ship, but within the trade areas served by. the association,

- great majority was engaged in ‘wholesale distributién,

‘The Commission contends that much of the wrongful

‘activity was committed through the conduct of Bakers and

of two individuals who were its successive secretaries dur-

ing the period in question. The purposes for which Bakers

was formed, as specified by its. corporate articles, included

the collection and dissemination among its members of

all lawful information for the benefit of the business of

its: members. . Petitioners contend that the primary pur-

poses, of the association, though not specified in the ar-

__,aatieles, pertained. to its negotiation of labor contracts as

a collective bargaining agent for its member companies

and its dealing with union labor grievances and with prob-

- Jems concerned with legislative cadmas regula-

tions,

We meat first examine petitioners’ vigorous challenge of |

the Commission’ ~ power to coms e jurisdictiom, It is

em ae ee

¥%

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claimed: that the alleged acts and practices, even if wrong-. -

fully committed, were not committed “‘in commerce’? within

the meaning of section 5 of the Act. Petitioners assert that

the challenged activities were wholly intrastate-and are .

thus not within the intendment of the statute. The FTC.

insists that its jurisdiction is properly supported by three

grounds, (1)-sales of bread by certain of the petitioners to

Alaskan customers f.o.b, dockside at Seattle, were sales

in interstate commerce, (2) bread produced and sold by

integrated, multistate corporations Continental,. Langen-

dorf, and Safeway is necessarily in interstate commerce, ©

even if all sales were made in only one state, and (3) an—

unlawful conspiracy between petitioners, Bakers of Wash-

ington, Inc., and others, fixing the price of breatt in the

State of Washington, is an unfair-methdéd of competition in —

interstate commerce regardless of whether or not peti-

tioner’s bread sales in the State of: Washington, is an

unfair method of competition in interstate commerce re-.

gardless of whether or not petitioners’ bread sales in the

State of Washington are considered to have been made in

interstate commerce. We believe that the first ground

_ sufficiently supports the Comimission’s jurisdiction and that

it is unnecessary: to examine the other two. a

Four of the petitioners, Buchan, Continental, Hansen, ©

and Langendorf regularly sold bread to customers in’ «

Alaska, f.o.b. dockside at Seattle.2 The Alaskan sales by -

each of these four amounted to less than one percent of its

&

?In addition to such Alaskan sales other regular out-of-state

shipments were made by Safeway and Snyder’s Bakery, Ine:

- Safeway shipped bread from its Seattle plant to an adjoining state

and Snyder, a wholesale baker in Yakima, sold bread to retailers

_ in the State of Oregon. On Aptil 1, 1959; Trennery’s Bakery Co.

- in Yakima was acquired-by Holsum Baking Company. Thereafter

all bread sold by Trennery’s in Yakima was imported from Lewis-

town, Idaho.. Petitioners conceded in proceedings befo the Com- .

mission that this bread sold in Yakima was ‘‘in commerce.”?

eT ee ee ee ee ae TN eT ST OTE ne ERD Oe ARCO NT ee See

total sales. . The prices to Alaskan customers weré ‘‘regular

wholesale prices’’,. determined -on the same basis as the

prices for sales within Washington State. Therefore, price

fixing in the State of Washington necessarily affected the

sales to Alaskan customers. The sales to the Alaskan

customers were sales in interstate commerce. See Dahnke-

Walker Milling Co. v. Bondurant, 257 U.S. 282, 290, 66 L.

Ed. 239, 42 Sup. Ct. 106 (1921) ; Addyston Pipe é Steel Co.

v. United States, 175 U.S. 211, 241, 44 L. Ed. 136, 20 Sup.

Ct. 96 (1899) ; California Rice Ind. v. FTC, 102 F.2d 716,

718 (9th Cir. 1939). This is sufficient to fix jurisdiction in. .

the FTC. E.g., Standard Container Mfr’s Ass’n v. FTC,

119 F.2d 262, 265 (Sth Cir. 1941). Petitioners contend, how-

ever, that we should ignore the Alaskan sales as a valid

basis of jurisdiction by application of the doctrine of de

minimis non curat lex and because the sales were unrelated

to the alleged conspiratorial acts. We have recently held

- that_only $3,086.31 in interstate purchases was sufficient to

sustain the jurisdiction of the NLRB over a local cemetery

association, NLRB v. Inglewood Park Cemetery Ass’n,

. 355 F.2d 448 (9th Cir. 1966): In that case, we quoted. the

Seventh Circuit’s response to an argument of de minimis,

‘‘The time has not yet arrived when $2,000 is but a trifle.”’

NIRB-v. Aurora City Iines, Inc., 299 F.2d 229, 231 (7th

Cir. 1962). Here the amounts involved are substantially:

greater than the amounts involved in the cited cases. The

provisions of the respective statutes granting jurisdiction

to the NLRB and the FTC are not identical. The labor |

- statute probably i is intended to be more extensive, but the

question as to what is ‘“‘de minimis’’ should not call for °

different answers. Assuming that the amounts of the.

. Alaskan sales were ‘‘de minimis”’, it would not necessarily -

follow that the. FTC was here without jurisdiction: In

United States v: Socony-Vacuum Oil Co., 310 U.S. 150,

, 225,-n.59, 84 L. Ed. 1129, 60 Sup. Ct. 811(1940), it was

written, ‘‘the amount of interstate or foreign trade involved

‘is not material (Montague & Co. v. Lowry, 193 U.S. 38),

5a

since §1 of the Act brands as illegal the character of the

restraint not the amount of commerce affected.’’ See also

Uniter States v. McKesson & Robbins, Inc., 351 U.S. 305,

310, 100 L. Ed. 1178, 76 Sup. Ct. 806 (1956), Pootnote

omitted. ), wherein the Court stated, .

a ie. :

“Tt makes no difference whether the motives of the

participants are good or evil; whether the price fixing

is accomplished by express contract or by some more

subtle means; whether the participants possess market

' eontrol; whether the amount of interstate commerce.

affected i 1s large or small; or whether the effect of 'the

agreement is to raise or decréase prices.’’. (Emphasis

added.)

See also Sun Oil Ca. v. FTC, 350 F.2d 624, 631-32 (7th Cir.

1965), cert. demed, 382 U.S. 982 (1966).

The Alaskan sales were not wholly unrelated to the ac-

' tivities which the FTC seeks to prevent. The prices re-

ceived for these sales, sales which were clearly made ‘‘in

commerce’’, were determined in the same manner as sales

3 made in the State of Washington. While it may be that

* the petitioners: intended that their activities. affect only

those sales made within. the ‘State bd Washington, . the

effect was otherwise,

Langendorf and Hansen contend that since they are en-

gaged in the sale of bakery products at wholesale. prices

only, they could not have conspired to fix and maintain re-

tail prices. Thé argument is specious. -Continental, Lang-

endorf, Hansen, and Buchan all stamp the retail price on

*the bread wrapper. The wholesale price paid by the re-

tailer is the stamped retail price less twenty percent. This

_ was established. by testimony of representatives of the

- wholesale bakers. Any price-fixing activity with regard to -

‘the wholesale price would necessarily have a direct and

immediate effect on retail prices. |

a ee as ee ee

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All of the petitioners contend that the Ocommissjon’ S

order i is not supported by substantial evidence. We do not

agree. Our attention is directed at certain significant and

relevant facts. | :

Representatives of Continental,. Langendorf, Hansen,

and Buchan regtlarly attended the meetings of Bakers of.

Washington, Inci, at the Washington. Athletic Club. Meet-

ings were held not less: than twenty-six times annually.

During the summer of 1958 meetings were held at which

prices’ were diséussed.° . :

On August 11, 1958, Continental, Langendorf, Hansen,

and Buchan all put into effect identical increases of two

cents per.one and one-half pound loaf of white bread, from °

thirty- one, cents to thirty-three cents. The bakery super-

visor of Albertson’s Stores, Inc., was informed: by. the

Secretary of Bakers of a price increase.. Petitioners con-

tend that prices were only casually discussed at the Bakers’

meeting in connection, with negotiation of labor contracts,

but the record reveals that price discussions took place, not

only .prior, but also subsequent to labor “negotiations.

On September 19, 1960, Hansen and ‘Langendorf raised

prices of the standard one and one-half pound loaf of white

bread from thirty-three cents to ‘thirty-four cents. Buchan

and Continental made a similar increase three days later.

One example of a price rise after price discussions at the

Bellingham division of Bakers took place in 1958. Robert

-8 Albert Pettersen, a former bakery supervisor for Albertson’s °

Stores, Inc., owner ‘of a.grocery chain, a member of Bakers and a

respondent below, testified,

‘‘Well we discussed the labor, we discussed our price of our

material—flour, shortening, sugar. And labor had jumped SO

high that they decided that we should have a raise in our

bread. From there we just, took it and they said, ‘What do

you think about certain prices?’ and they kicked it around

and, so that is as far as it went as long as I sat there.’? (Em-

phasis added.)

Ta

* ‘Hall, of Hall’s Bakery in Bellingham, which had been

known as a ‘‘cut-rate’’ bakery, .testified that he had been

asked by ‘‘the represéntatives of Bakers of Washington,

Ine.’’ to join and. follow in line with other bakeries in the.

prices set.

One Schafer, owner of a me company, testified that

a meeting of the Yakima division of Bakers was called sub-

sequent to a price-cutting ‘incident in that city.. The meet--

ing was attended by representatives of both wholesale and

retail bakers. Schafer’s testimony indicates that much of

the discussion at the meeting was directed at the expressed:

need to coordinate prices among the retailers and eliminate

‘‘thrift-store’’ competition. Lalime, who became the secre-

' tary of Bakers in November, 1957, was quite active in

- maintaining prices. The. bakery products supervisor of a

gretery chain testified that after having lowered his com-

pany’s price on raisin bread to nineteen cents per loaf, he

received a telephone éall from Lalime. Lalime informed

him that a wholesale baker had complained about the nine-

teen-cent price and’ Lalime told the supervisor) that he

should charge the regular price. On another occasion, this _

superintendent himself made use of Bakers to combat price

cutting. He called up Lalime and complained of the low

price of bread in Bellingham. Lalime told him not to cut

- his prices, ‘‘You just wait and let me take care of ‘thie. ie

The supervisor. testified,

. “Well, Mr. LaLime represents all the bakers hére in

the State of Washington and he is supposed to kind of

keep us all in line, to try to help us all out. That is

his job, to keep the’ people that belong to the association

and to keep the’ prices where they belong.’’

Robert Hall testified that *he had been solicited to join

Bakers three times. He was told by Lalime that the pur-

poses of the association were ‘to make better labor .rela-

© SR,

=

tions, to ‘maintain prices and generally better baking con-

ditions.’’ (Emphasis added.)

8a

The Sere poipts to only some of the testimony from.

which it might be reasonably inferred that price-fixing ac- -

tivities occurred.. ‘‘[T]he function of this Court, is merely

_to-make a-comprehensive review of the record before the ~

Commission and to determine if the findings are supported

by substantial: evidence on such record considered asa

whole.’’ Goodman v. FTC, 244 F.2d 584, 589-90 (9th Cir.

1957) (Emphasis in original.) (Footnote omitted.). ‘See.

Se et i tS te

also Sun Oil Co. v. FTC, supra. ‘The findings of the Com-

mission’ as to the facts, if supported by evidence, shall be

conclusive. ». 15 U.S.C. §45(c). It is not the province of

our court, in reviewing FTC findings, to substitute its own

appraisal of the testimony and to pick and choose among

uncertain and conflicting inferences. ‘‘Statute and decision

. forbid the exercise of that power.’’? FTC v. Algoma

Launker Co., 291.U.S. 67, 73, 78 L. Ed. 655, 54 Sup. Ct.

315 (1934) (Citation omitted.) ; Stauffer eeperenerset, Inc.

v. FTC, 343 F.2d 75, 80 (9th Cir. 1965).

Here, we have a determination of: a conspiracy to fix

* prices. It would be ‘‘naive’’, as Judge Barnes wrote for

our court in Esco Corp. v. United States, 340 F. 2d 1000,

1006 _(9th Cir. 1965), ‘‘to believe that a formal signed-and-

- sealed contract or written resolution would conceivably be

adopted at a meeting of price-fixing conspirators in this —

day arfd age. In fact, the typicai price-fixing agreement i is

usually accomplished. in a contrary manner.”’ |

Petitioners contend that the FTC erred in finding and

holding that a conspiracy existed solely upon evidence of

general discussions of price levels occasioned by and oc-

curring during discussion of collective bargaining for labor

union contracts. ‘They also contend that the FTC erred in

determining, upon the sole basis of simultaneous or nearly

simultaneous price increases, that.a conspiracy to set and

fix prices‘existed. We do not believe that the FTC. so

found and so held.. It seems anomalous that petitioners

would contend that there were two ‘‘sole’’ bases for the

9a

FTC's finding of a conspiracy to raise, set, and fix prices. - s

It is. quite true that ‘‘even ‘pure’ conscious parallelism ot

_ prices is, standing alone, not unlawful. Nor is an indi-

». «vidual competitor’ s sole decision to follow a price leader-

ship, standing: alone; a violation: of law.’? Esco Corp. v..

~ United States, 340. F. 2d at 1007. It is of some significance

here that at no time was a decrease in price by one of the

wholesalers or retailers joined in by all his fellows nor

' Was any such decrease of an enduring nature. The con-

trary was true when prices were increased. We see more

than mere conscious parallelism and the use of the Bakers’ .

forum for the discussion of prices. The vigorous activity

of the secretary of Bakers cannot be ignored. His acts

were committed under the color of his official authority,

and while all those involved apparently knew of his en-

_ deavors, none. voiced objection to his attempts to keep

prices in line by all-means chosen by him. In the activities

which concern us, he was the agent of the association, and

the association was the agent of igs members. »+——

Safeway contends that it stands apart, that there was no

substantial evidence that it participated in the conspiracy.

It points to the facts that it was not a member of Bakers

and that it charged one cent per loaf less for its house

brand of bread than was the prevailing price on the other.

brands. The existenée of the price differential did not

compel the Commission to find that Safeway was not:a,

_conspirator. See FTC v. Sun Oil Co., 371 U.S. 505, 9 L. Ed.

“2d 466, 83 Sup. Ct. 358 (1963). It-may lave been inferred

% that Safeway enjoyed a position disempowering others to

prevent its reducing its price or that it merely followed the

common practice of many chains in charging less for items .

sold ynder house labels, or both. As to its nonmembership

_in Bukers, the record reveals that Safeway directly paid

to Bakers’ secretary the sum of $600 per year, an amount .

equivalent to the maximum annual dues charged for

Bakers’ members. _ While Safeway claimed that the con-

ee pore Beets ore aera 18 ft iin —_— sa ce be So

10a

sideration was the secretary’s individual representation in

_ its labor matters, the Commission was free to infer other-

wise. . aoe

\ ‘‘Once the existence of the common scheme is established,

: very little is required to show that defendant became a

a \s, party—‘slight evidence may be sufficient to ‘connect a de-

\ . fendant to it.?~Nye & Nisser v. United States, 168 F.2d

, (\ 846, 852 (9th Cir, 1948), affirmed 336 U.S. 613, 69 S.Ct.

‘ \ 766, 93°L. Ed. 919.” Hernandez v. United States, 300 F.2d

114, 121-22 (9th Cir. 1962). (Footnote omitted.) Our court -

\ made the quoted pronouncement in a criminal case, wherein

\ the Government’s burden of proof was greater than that —

’\ which here rested upon the Commission. As to the alleged

conspiracy itself, we hold that there was evidence which,

ith its inferences, was ‘sufficiently substantial to support

a determination that the petitioners ‘“‘had a unity of pur-

se or a common design and understanding, or a meeting

the minds in an unlawful arrangement, wee ee? American ©

Thbacco Co. v. United ote U.S. 781, 810, 90 L. Ed.

575, 66 Sup. Ct. 1125 (1946). 0 Continental Baking

Co\ v. United States, 281 F.2d. by (6th Cir. 1960). We also

hold that there was substantial evidence to support find-

ings that each of the petitioners, including Hoyt, a Hansen

- officer and Bakers vice-president, participated.

Continental alleges error in the denial of its motion to _

disq alify Commission Chairman Dixon from participating

in the proceeding. Dixon became chairman of the FTC in |

March, 1961. In 1959, in his then capacity as Chief Counsel - °

and taff Director of the Antitrust and Monopoly Subcom-

mittee of the United States Senate, he participated in a

‘Subcommittee hearing on administered pricing in the bread

industry. He friterrogated Continental’s president, and it

is urged that his questions suggest such a fixed view on

one aspect of the present controversy that we should over-

rule the Commission’s determination that he was not’ dis-

_ qualified: Continental points to one of the questions which .

Be ees nant | |

Dixon put to its president in 1959, which was, ‘‘You don’t

want to leave the impression that your independent plant

managers have the right to make a major price change

without your approval, do\you?’’ It is claimed here that

the question reveals Dixon’s definite opinion -that Conti-

nental’s ‘‘independent’’ plant managers could not effect a

major price change without the approval of the president. 3

-We do not agree that an attorney’s personal opinion on a

factual controversy may be igferred from questions he puts

in the performance of his professional duty. Moreover, if

the existence of an opinion which Dixon would retain for ,

two years could be inferred from the-quoted question, the .

answer given by Continental’s president reveals that he ~

himself agreed with the opinion claimed to have been enter-

tained by Dixon. \

Contiffental relies on Texaco, Fh v. FTC, 336 F.2d. 754°

(D.C. Cir. 1964), vacated and vemonded on other grounds,

: 381 U.S. 739, 14 L, Ed. 2d 714, 85 Sup. Ct. 1798 (1965), in

which it was held that Chairman Dixon was disqualified

from joining in a Commission order. There, the basis was

a statement made by Dixon in a speech delivered while the

controversy was pending before an FTC examiner and be-

fore it had been. submitted to the Commission. A disin-

terested reader of his speech, wrote the D.C: Circuit, “could

: hardly fail to conclude that he had in some measure decided

in advance that Texaco had violated the act.”? 336 F.2d

at 760. This is a different case. There is nothing here to’

indicate that Chairman Dixon has ‘“‘taken a position ap-

parently inconsistent with an ability to judge “the facts °

fairly, .. 7? 336, F.2d at 764 (Washington, J., concurring

in part “el dissenting in part). We refuse to hold that, on

the basis of the questions asked of Continéntal’s president.

by Chairman Dixon, then not a member of the Commission, —

prior to the initiatiow of the present proceedings, and not *

including a statement of opinion as to an ultimate contro-

verted issue which he would judge, a disinterested observer

would have reason to believe that he had prejudged the dis-

Be atte iat eebiilisats shy Dati diceis babs a ee eee

12a.

- pute. See Gilligan, Will & Co. v. SEC, 267 F.2d 461, 469

(2d Cir.), cert. denied, 361. U.S. 896, 4 L. Ed. 2d 152, 80 _

Sup. Ct. 200 (1959) ; Texaco, Inc. v. FTC, supra at 764,

Dixon’s disqualification was sought under the provisions

of section be of the Administrative Procedure Act. It

provides, ‘‘.... Any such [presiding officer or officer par-

‘ticipating in ‘thé decision] may at any time withdraw if

he deems himself disqualified ;‘and, upon the filing in good

faith of a timely and sufficient affidavit of /personal bias or .

disqualification of any stich officer, the agency shall de-

ie termine the matter as a part of the record and decision in _

: the case.’’? 5 U.S.C. §1006(a) (Emphasis added.). The |

"motion for disqualification was not ‘‘timely”’. Continental

became involved in this proceeding in April, 1961. The

Hearing Examiner’s decision was issued July 20, 1962.

~ Continental prosecuted its appeal, filed its: briefs, and

argued orally to the Commission, with Chairman Dixon

participating, on January 9, 1968. On February 28, 1964,

the Commission’s decision on the merits was handed down.:

Not until October 21, 1964, nine months after the Commis- ~

sion. had issued: its decision and opinion, did Continental

claim for the first time that Dixon -was prejudiced and not

qualified. Continental was always fully knowledgeable, of

- course, as to the extent of Dixon’s participation, over five 48

years - -eatlier, in the Senate hearings. In thése circum-

stances, it could not remain silent, await the decision of .

the Commission, and then, doubtless because of its disap-

pointment, seek for the first time to asperse the objectivity

of a quasi-judicial officer: who. = in the challenged

opinion. :

_ In American Cyanamid Co. . FTC, Nos. 15805, 15797,

15801, 15806, and 15788, June 16, 1966 (6th Cir.), it was

held that Chairman Dixon was disqualified: In that case

‘it:appears that he took a much more active part in the in-

‘vestigation of the drug industry when he had been Chief

Counsel and Staff Director of the Subcommittee on ‘Anti-

oe

oO

had “proved”? facts to the contrary,

| | 18a oe

trust and Monopoly of the Committee on the Judiciary of

the United States Senate than he did in the hearings re- °

lated to the case at bar. Furthermore, the petitioners in

American Cyanamid filed their motions for disqualification

almost immediately after their noticing appeals from the

Hearing Examiner’s’ initial decision. )

Petitioners ‘Langendorf, Hansen, and Hoyt contend that

the Commission erred in taking official notice and incorpo-

rating in the record fitdings of another Commission pro-

ceeding, In re Continental Baking Co,, Dkt. 7630, October

27, 1959. These three petitioners were not parties to. that

proceeding. They urge that the taking of such official notice

was in violation of sections 7 (c) and 7(d) of the’ Admin-

istrative’ Procedure Act, 5 U.S.C. §1006(c), (d) and the

Fifth Amendment. Safeway also complains. “Continental

argues that the taking of such official notice was error be.

cause the issue to which that testimony was addressed was

central and disputed in the present controversy and because.

the Commission adhered to its reliance after Continental

. The question relates to compliance with section*1006(d),

which provides in pertinént part, “‘Where any agency de-

cision rests on official notice of a material fact not appear-

ing in the evidence in the record, any party shall on timely

_ request be afforded an opportunity to show the contrary.’’

While all parties were given the “‘opportunity’’, only .

Continental chose to attempt to show the contrary to the

matter officially noticed. The remaining petitioners, not

having followed the statutory requirement, must be held to

have waived objections. . net se °

The officially noticed material camé: from a Hearing Ex-

aminer’s decision involving Continental which was then,

in 1959, charged with illegal price discriminations and dis- _ ;

_ ¢riminatory payments in violation of 15 U.S.C. § 13(a),

(d). Continental had been accused of granting discrimina-

‘ —_ * — .

Daa sani ai Rasa BARE te ptt as ingen Jeet re nine Nim aig als deh hee ee tt

14a

tery price. concessio d discriminatory promotional al-

lowances to certain favored customers. The Examiner’s

decision was that the complaint should be dismissed; and

his decision was affirmed by the FTC on’ December.31, 1963.

The noticed matter related to the structure and operation

‘of Continental’s butiness. It included, as is recited i in the -

Commission’ S Opinion, corporate organization, territorial’ —

assignments, purchasing, production, pricing, money col- .

lected from sales, accounting, personnel, insurance, engi-

, neering, vehicles, sales, labor relations, cacknging, and

advertising. * | -

. The oS included the material in its opinion as

foundation for its.conclusion that, Continental’s operation

in the State of Washington was ‘‘in commerce”’. Cowehing

the conclusion on this ‘point i in |terms of the Supreme Court

gecision in United States v. South- Eastern Underwriters

Ass’n, 322 USS, 533, 88 L. Ea. 1440, 64 Sup. Ct. 1162 (1944),

the Commission wrote,

~“Tts local sales agent can, easily agree to deliver on”

consignment a dozen loaves of “Wonder’ bread every

| Monday, ee ‘innumerable transactions,’ many of.them

directly ‘in’ interstate commerce, are )~necessary to:

pean, The work of Continental’s driver-sales-

men is merely the peak of the iceberg; beneath it} sunk

de@p into the stream of interstate“commerce, is thé om,

real body: of the transaction. ~

‘‘We find that all of Continental ’s sales i in the State

of Washington were ‘in’ interstate commerce. All of

Ahem involved a ‘New York seller and a Washington

- buyer. Eafh of them was an indivisible part of a host .

of ‘transactions * * * [that] constitute? a single con-

tinuous chain of events, ey of which were multistate

have been continned but for that part of them which -

mbved- back and forth across _ state lines.’ South.

Eastern Underwriters, supra, 332 U.S. at 537.’

oe

es | sat

We have already expressed our opinion that the iuriedic:

tion of the Commission was properly founded upon the

‘interstate, Alaskan sales. Since the Commission’s appli-

cation of the officially noticed material was obviously limited

" -.to an alternative basis of jurisdiction, it is unnecessary to

dwell upon the propriety of the reliance. |

Petitioners. contend that Flotill Prods., Inc. v. ‘PTC, No.

* 19521, decided by a panel of our court on March 15, 1966,

requires a remand to the Commission.

In Flotill, only two of the three participating members of |

the Commission voted affirmatively for the challenged

order. Our court held that a majority of the five-member

* Commission* must join in issuing a valid order and re-

manded the case to the Commission. ‘The case was resub-

mitted to the court en banc and the Age decision sustained

with four of our nine judges dissenting. . . oe

In the present proceeding the Commission made two de-

cisions. The first, ordering the petitioners to cease and

desist from ‘fixing prices,-was issued by a three-to-one vote.

It was held that an unfair act or practice was shown by

the record, that all respondents below were legally ‘re- ©

sponsible therefor, and that the Commission had jurisdic-

tion under séction 5 of the Federal Trade Commission Act

to issue a cease and desist order. Thereafter, upon Conti- -

, nental’s motién, the Commission stayed the issuance of its _

order and remanded the case to the _— Examiner to

permit Continental to attempt to prove the contrary of the

officially noticed facts.. After further hearings, and de-

spite an attempted showing ‘of ‘facts contrary to those

officially noticed, the Commission by a two-to-one vote

affirmed its original decision and directed that the order

issued by the three-to-one vote to be made effective. _

Continental: says that Fiotill ‘requires the remand to

the Commission for further consideration of the question

decided by less than a majority of ™ Commission—that - .

. &

16a

an unfair act or practice in commerce was established.’’

We disagree. Our decision as to the existence of the ‘‘in

commerce’’ requirement of the Act is based upon the inter-

- * state character of the activities resulting from the Alaskan

sales and not upon the possible interstate nature. of Con-

tinental’s overall operations. Thus, though Flotill would

perhaps be applicable if we sustained the Commission’s

alternate ground for its exercise of jurisdiction, the de-

cision is of no present consequence. :

Finally, petitioners challenge the scope “of the cease and

desist order, quoted. below,* as being excessively and ‘un- .

¢ ae, . ‘ORDER

Ir Is OrpEReEp that the respondent Bakers of Washington, _,.

an incorporated association, and respondents George B. Buchan,

Richard Hoyt, and Arthur H. LaLime, individually and as officers

of respondent association, and their representatives, agents and’em-

*. ployees, directly or through any corporate or other device, in-or in

connection with the offering for sale, sale or distribution of bread,

do forthwith cease and desist from: — +g:

' Entering into, carrying out, continuing or cooperating al

any: planned commow course of action, understanding, agree- ._

_Mment,. combination. or eonspiraey between or among any two

“or more of said respondents, or members of Bakers of Wash-.-

ington, TInc., or between any one or more of them and.others

not parties hereto, where any one or more of the parties to

that planned common course of action, understanding, .agree-

ment, combination or conspiracy is selling bread in intetstate

commerce: in competition with bread sold by any one or more

of the other parties thereto, to do or perform any of the fol-

lowing things: nee : .

(1) Establish, fix or maintain prices, terms or conditions

of sale of bread, | : .’

' (2) Adhere to any prices, terms or conditions of sale so

_ fixed or maintained, or

(3) Deter or attempt to deter’ any competitor from exercis-

ing his individual-judgment as to prices, terms or con-

ditions of sale of bread. — . °

«It Is ‘FURTHER Orprrep that the respondénts Buchan Baking

Co., Continental Baking Company, Langendorf United Bakeries,

o

Bakery, 417 W. Wishkah Street, Aberdee

ae"

17a

reasonably broad. In our-judgment the order withstands -

the challenge. We.are taught that ‘‘unless the remedy

bears no reasonable relation to the existing unlawful prac-

— Ine., Harisen Baking Co., Inc., Trenerry’s Bakery Co., and Snyder’s

Bakery, Ine., corporations, John M. Larson, trading as Larson’s -

Bakery, and: Vie H. Goethals, trading as Fortune’s Bakery, all -

‘ members of respondent association, and the following members of -

said association, not named as respondents herein, Ashbrook Bak-

eries Corp., 1407.11th Avenue, Seattle, Washington; Albertson’s,

Ine., 17000 Aurora Avenue, Seattle; Baders’ Dutch Bakeries, 3755:

University, Seattle; Baker Boy Bakery, 8050 Bothell Way, Seattle;

Bake-Rite Bakery, 1414 14th Avenue, Seattle; Bellinger Bakery,

North Bend; Best Pie Company, Inec., 132 Queen ‘Anne Avenue,

Seattle; Big Four Donut,. Inec., 319 Nickerson Street, Seattle ;

Blake’s Bakery, Inc., 4729 California Avenue, Seattle; Bookter’s

Seattle Rakery, Inc., 3409 4th Avenue South, Seattle; Butter-Krisp

Bakery, Inc., 2203 28rd Avenue South, Seattle; Boldt’s Western

Hotels Food Service, Inc., Boeing Cafeteria, Boeing Plant 2,

Seattle; Carolyn’s Cakes, 518 15th Avenue North, Seattle; Caster’s

- Lake City Bakery, 12532 Bothell Way, Seattle; Frederick & Nelson

(Bakery Department), 5th at Pine, Seattle; Gai’s Seattle French

Baking Co., Inc., 2006 Weller Street, Seattle; Golden Rule Bakery,

- Inc., 4450 Fremont Avenue, Seattle; Grandma Cookie Baking Co.,

Ine., 3402 Wallingford Avenue, Seattle; Karl’s Bakery, 1614

Hewitt Avenue, Everett; Kent Bakery, 213 First South, Kent;

Lippman’s Bakery, Ine., 119 28rd Avenue, Seattle; Lindsay’s

Thriftway Market, 11100 Roosevelt Way, Seattle; Manning’s, Inc.,

621 Seaboard Building, Seattle; Richard’s Fried .Pies, Inc., 220 1st

Avenue, North, Seattle; Swiss Pastry & Candy Shop, 1325 5th

Avenue, Seattle; Smith & Sonnleitner Cookie Co., 1238 No. 99 W.,

MeMinnville, Oregon (7710 Bagley, Seattle, Washington); Van.

de Kamp’s Holland Dutch Bakers, 823 Yale Avenue North, Seattle ;

Grand Central Bakery, Market & H St berdeen ; Syanson’s

Foods, Inc.,.1401 Simpson Avenue, Aber Idkamp’s Olympic

e’s Ye Olde Heme

Baking Company, °

Bakery, Riverside, Mount Vernon; Bellin

2001 State Street, Bellingham; City Bakery, 607 ‘1st Street, Mount

"Vernon ; Thrifty Foods, 130 Fairhaven Avenue, Burlington; Golden ©

Rule Bakery, Inc., 915 Center Street, Tacoma; Jordan Baking

Company, 3623 S. 54th Street, Tacoma; Eddy Bakeries Company,

Inc., 232 S. Front Street, Yakima; Sigman Food Stores, P. O. Box

618, Yakima; Miss Maud Pemberton, Golden Rule Bakery, Inc.,

4450 Fremont Avenue, Seattle; Henry Richards, Continéntal Bak-

=. . Sa T ni ahi cA te rebar 9 Mes tains $e flo dd awn tent re Atrini oan

8

18a -

ener ney 8

tices, the Commission’s discretion as to the scope of the

order should not be disturbed.- Federal Trade’ Commis-

sion v. National Lead. Co., 1957, 352 U.S. 419, 428-429, 77

S.Ct. 502, 1 L.Ed.2d 438.’ Gellman v. FTC, 290 F.2d 666,

ing Company, P. 0. Box 3227, Seattle; Lloyd C. Mitchell, Van de

Kamp’s Holland Dutch Bakers, 823 Yale Avenue North, Seattle ;

: - Lou’ Blackfield, Bake-Rite Bakery, 1414 14th Avenue, Seattle;

2 ; Horace Snyder, Snyder’s Bakery, Inc., 31°North 4th Street,

: Yakima; Al Moore, Langendorf United Bakeries, Inc., 2901 6th .

Avenue South, Seattle; Roy Reynolds, Grandma Cookie Baking

a Co., Inc., 3402 Wallingford, Seattle; LeConie Stiles, Jr., Ashbrook

4 _ ‘Ruth Bakeries Corp,, 1407 11th Avenue, Seattle; Henry Gai, Seattle

-.°. ” French Baking Co., Inc., 2006 Weller Street, Seattle; Donald R.

-3 Due, Best Pie Company, -Inc., A ‘Queen Anne Avenne, Seattle;

| and Maurice Bybey, Baker Boy Bakery, 8050 Bothell Way, Seattle ;

and their representatives, agents and employees, directly or through

any corporate or other device, in or in connection with the offering

for sale, sale or distribution of bread, do forthwith cease and

desist from: —_- 2 fax me

Entering into, carrying out, continuing or cooperating in

| any planned common course of action, understanding, agree-

dq - ment, combination or conspiracy between or among any two or

: ‘more of said respondents, or members of Bakers of Washing

i ton, Inc., or between any one or more of them and others not

parties hereto where any one or more of the parties to that

S.C planned common course of action, understanding, agreement,

; combination er conspiracy is selling bread in interstate com-

- merce in competition with bread sold by any one or more of

we the other parties thereto, to do or perform any of the following

things: . ye

(1) Establish, fix or maintain prices, terms or conditions

of sale of bread, eee,

(2) Adhere to’ any prices, terms or conditions of sale so

fixed or maintained, or ~~. °

(3) Deter or attempt to deter any competitor from exercising

his individual judgmént as.to prices, terms or conditions

. of sale of bread. brs ‘

{I Is FurTHer ORpERED that Safeway Stores, Inc., and Holsum

‘Baking Company, corporations, respondents, but not members of

the respondent association, and their representatives, agents and

employees, directly or through any corporate or other device, in

\

iS en aN

WES en St aie Re ne nec Weer

.

M38 GS Delp DR ee MAL DAD oh;

19a

670-671 (8th Cir. 1961). It can hardly be denied that the

. challenged order bears a ‘‘reasonable relation’? to the .

_ practices found by the Commission to have been unlawful.

In FTC v. Colgate-Palmolive Co., 380 U.S. 374, 392, 13

L. Ed. 2d 904, 85 Sup: Ct. 1035 (1965), the Supreme Court

repeated its opinion in FTC v. Cément: Institute, 333 U.S.

683, 726, 92 L. Ed. 1010, 68 Sup. Ct. 793 (1948), that ‘‘an

order’s prohibitions ‘should be clear and precise in order

that they may be understood by those against whom they

are directed,’ * *'* **? 380 U.S. 392. Here the Commission

_ has directed that the petitioners shall not engage in a con-

- spiracy to rg Ee eas te

**6 (1) Establish, fix or maintain prices, terms or condi-

tions of sale of bread, hee oY |

(2) Adhere to any prices, terms or conditions of sale :

so fixed.or maintained, or “4

(3) Deter or attempt to “deter any competitor from

exercising his individual judgment as to prices,

“terms or conditions of sale of bread.’’ .

or in connection with the offering for sale, sale or distribution of

bread, do forthwith cease and desist from: Ee

Entering into, carrying out, continuing or cooperating in

any planned common course of action, understanding, agree-

ment, combination or conspiracy between or among any two

or more of said respondents, or members of Bakers of Wash-

’ ington, Inc., or between any one or more of them\and others

“not parties hereto, to ‘do or perform any of the following

things: ihe Ras . -

(1) Establish, fix or maintain prices, terms or conditions

of sale of bread, _ |

(2) Adhere to any prices, terms or conditions of sale so

fixed or maintained, or

(3) Deter.or attempt to deter any.competitor from exercis-

- ing his individual judgment as to prices, terms or con-.

ditions of sale of bread.’”” fe '

Si iar ‘nen i POE Mag sete Ea Nah i nine nt 0 et titel Sn he a RI RR at hey oe ep ae oe mS +a ee

ae 20a °

To us, these injunctions seem clear, and we are unable to =

accept the contention that they are so imprecise as not

adequately to warn a reasonable man of the prohibited

activities in which he shall not continue to engage.° --

9 ‘‘Tt has been repeatedly held that the Commission has -

eo oon wide discretion in determining the type of order that

‘ is necessary to cope with the unfair practices found,

e.g., Jacob Siegel Co: v. Federal Trade Comm’n, 327 |

US. 608, 611, and that Congress has placed(the pri-

' - mary responsibility for fashioning orders upon the

eg - Commission, Federal Trade Comm’n v. National Lead

ES Co., 352 U.S. 419, 429. For these reasons the courts

| should not ‘lightly modify’ the Commission’s orders. ©

Federal Trade Comm’n v, Cement Institute, 333 U.S.

683, 726.” 3 re

|

|

5 Commissioner Elman, dissenting, believed the order to be in-

: _ supportably broad. He suggested that the order should have been

; : made so specific as és mae

‘to forbid not only the conspiracy itself but also the specific

acts and practices upon which the effectiveness of. the con-

| _spiracy—its translation into actual anticompetitive conduct—

° depends.” eh 0

Commissioner Elman continued,

_“*Tt-is immaterial that these acts and practices may be lawful

in themselves ; the Commission has ample power to forbid them

if necessary to ensure that the conspiracy will cease and not

> be resumed. F.T.C. v. National Lead Co., 352 U.S. 419, 430.’’

We agree that the. Commission, applying its expertise, might have

> properly chosen to issue an order containing prohibitions against

specific acts. Obviously, however, it determined that there was no

pressing need that it do so: We would not order the Commission

to amend its order so as to impose upon the petitioners specific

' prohibitions more severely restrictive than the Commission, -from

its review of the evidence, believed to be required., - .

a

oe ath Pe tin enti

2a ee \

FTC v. Colgate-Palmolive Co., supra, 380 U.S. at 392,

Some of the petitioners claim that the order is overbroad

_ because it would regulate their conduct throughout, the na-

tion even though the activity found to be illegal took place

in only one area of the country. We do not believe the

complaint is justified. Since the order is sufficiently specific

and since it prohibits only conduct which is per se illegal

under- the Act, we do not think it is objectionable simply —

because its application is made as broad as petitioners’

- business activities.. As the Commission concluded, ‘‘there

is no reason to suppose that an entity showing no reluctance

to fix prices in Seattle, Washington, would act differently

in another city or another state’’ in which it does business.

In a comparable situation the Court of. Appeals for fhe

Fourth Circuit stated, ‘‘As to territorial extent, the com-

‘pany, having been found guilty of a flagrant violation of the _

_ Act, was properly required to cease and desist from such

practices in all. areas in which it was doing business.’’

Maryland Baking Company v. Federal Trade Commission, _-

243 F.2d 716, 718 (4th Cir. 1957). See also Foremost —

Dairies, Inc, v. Federal Trade Commission, 348 F.2d 674.

(5th Cir. 1965). eee

Affirmed.

ncn td \ a ate A vibes ornare RO

‘

APPENDIX B

UNITED: STATES OF AMERICA

BEFORE FEDERAL TRADE COMMI

- COMMISSIONERS: |, ;

: Rand Dixon, Chairman

rd. Anderson

mea

R. Reilly

Docket No. 8300

In the Matter of

Bakers or WASHINGTON, INc., an incorporated association,

its officers, Board of Trustees, employees, representa-

tives and agents, including but not limited to the fol-

lowing: Gzorce B. Bucnan, Ricnarp Hoyt, ArrHuR

H. Laue; ;

the following named members of respondent association:

Bucnan Baxinc Co, Continental Bakixe Company,

Lancenporr Unirep Bakeries, Inc., Hansen Bakine

Co., Inc., TrENNERY’s Bakery Co., Snyper’s Bakery,

- Iwne., corporations © Pe

Joun M. Larson, trading as Larson’s Bakery, Vic H.

GorrHa.s, trading as Forrune’s Bakery, each individ-

ually and as a member of the respondent association

and all as representative of all of the members of re-

spondent association; Sareway Stores, Inc. and Hot-

.sum BaKine Company, corporations. | |

\ FinalOrder hd

This matter having been heard by the Commission upon -

exceptions to the hearing examiner’s initial decision filed |

by respondents and upon briefs. and oral arguments in

_ support thereof and in opposition thereto; and

23a

The Commission having rendered its decision and having

determined that the initial decision should be modified in

accordance with.the views expressed in the accompanying

. Opinion, and, as so modified, adopted as the decision : of

‘the Commission: ent ity

- Ir Is Onperep that the findings of fact in the initial de-

-, cision be, and they hereby are, modified by adding to find-

ing number 26, page 10 of the initial decision, the further

findings set forth in the paragraphs designated ‘A’?

through ‘‘O”’ beginning on page 15 and extending through

the second paragraph on page 20 of the accompanying

opinion” cae ; |

Ir Is Furruer Orverep that in lieu of the order to cease -

and desist contained in the initial decision, the following

be, and it hereby is, entered as the order of the Com-

mission: Ae | ;

Iv Is Orperep that respondent Bakers of Washing-

_ ton, Inc., an incorporated ‘association, and respondents

George B. Buchan ayid Richard Hoyt, individually and

as officers of respondent assvciation, and respondents —

Buchan Baking Co., Continental Baking Company,

‘Langendorf United Bakeries, Inc., Hansen Baking Col,

Inc., Trenerry’s Bakery Co., and Snyder’s Bakery, Inc.,.

corporations, John M. Larson, trading as Larson’s »

Bakery, and. Vic H. Goethals, trading as Fortune’s .

Bakery, all members of respondent. association ; and the

following members of said association: Ruth Ash-

brook Bakeries Corp., 1407 11th Avenue, Seattle,

Washington; Albertson’s, Inc., 17000 Aurora Avenue,

Seattle; Baders’. Dutch. Bakeries, 3755 University, °

Seattle; Baker Boy Bakery, 8050 Bothell Way, Seattle; .

Bake-Rite Bakery, 1414 14th Avenue, Seattle; Bellinger

Bakery, North Bend; Best Pie Company, Inc.,. 132

Queen Anne Avenue, Seattle; Big Four Donut, Inc.,

319 Nickerson Street, Seattle; Blake’s Bakery, Ine.,

4729 California Avenue, Seattle;. Bookter’s ‘Seattle

Bakery, ai: 3409 4th Paras South, Seattle; Butter-_

’ Krisp Bakery, Inc., 2203 23rd Avenue, South, Seattle;

- Boldt’s Western Hotels Food Service, Inc., Boeing

Cafeteria, Boeing Plant #2, Seattle; Garolyn’s Cakes,

518 15th Avenue, North, Seattle; Caster’s. Lake City

. Bakery, 12532 Bothell Way, Seattle; Frederick & Nel-

son’ (Bakery Department), 5th at Pine, Seattle; Gai’s

“Seattle French Baking Co., Inc., 2006 Weller Street,

; Seattle; Golden * Rule Bakery, “Ins, 4450 ‘Fremont

i \. Avenue, Seattle ; Grandma Cookie Baking Co., Ince., ,

‘. 3402 allingford Avenue, Seattle; Karl’s Bakery,

: _ *1614 Hewitt Avenue, Everett; Kent Bakery, -213 First’

|. - South, Kent; Lippman’s Bakery, Inc., 119 23rd Avenue,

Seattle ; Lindsay’s Thriftway Market, 11100 Roosevelt.

j Way, Seattle; Manning’s, Inc., 621 Seaboard Building,

- Seattle; Richard’s Fried Pies, Inc., 220 1st Avenue,

j - North, Seattle; Swiss Pastry & Candy Shop, 1325 5th

Avenue, Seattle: Smith & Sonnleitner Cookie Co., 1238.

} No. 99 W., McMinnville, Oregon: (7710 Bagley, Seattle,

Washington) 3 Van de Kamp’s Holland Dutch Bakers,

| 823 Yale Avenue, North, ‘Seattle; Grand Central

: - Bakery, Market\& H Streets, Aberdeen; Swanson’s

q Food, Inc., 1401 Simpson: Avenue, Aberdeen; Veld- °

kamp’s Olympic Bakery, 417 W. Wishkah Street, Aber-

y deen; Bame’s Ye Olde Home Bakery, Riverside, Mount

Vernon; Bellingham Baking Company, 2001 State

Street, Bellingham: City Bakery, 607 1st Street, Mount

Vernon; Thrifty Foods, 130 Fairhaven Avenue, Bur-

lington; Golden Rule Bakery,Inc., 915 Center Street, .

Tacoma; Jordan Baking Company, 3623 S. 54th Street,

‘Tacoma; Eddy Bakeries Company, Inc., 232 S. Front

Street, Yakima; ‘Sigman Food Stores, P. O. Box 618,

Yakima; and the following officials of Bakers of Wash-

ington, Inc.: Miss Maud Pemberton, Golden Rule

Bakery, Inc., 4450 Fremont Avenue, Seattle; Henry

~Richards, Continental Baking Company, P. 0. Box 3227,

. Seattle; Lloyd C. Mitchell, Van de Kamp’s Holland

en

25a |

Dutch Bakers, 823 Yale Avenue, North Seattle; Lou

Blackfield, Bake-Rite Bakery, 1414 14th Avenue,

Seattle; Horace Snyder,, Snyder’s Bakery, Inc, 31

North 4th Street, Yakima; Al Moore, Langendorf

United Bakeries, Iné., 2901 6th Avenue, South, Seattle ;

_- Roy Reynolds, Grandma Cookie Baking Co. Inc., 3402

Wallingford, Seattle; LeConie Stiles, J r.. Ruth Ash-

brook Bakeries Corp., 1407 11th Avenue, Seattle ; Henry

Gai, Seattle French Baking Co., Ine., 2006 Weller

Street, Seattle ; Donald R. Due, Best Pie Company, Inc.,

132 Queen Anne Avenue, Seattle; and Maurice Vyvey,

Baker Boy Bakery, 8050 Bothell Way, Seattle, as

officers of Bakers of. Washington, Inc.; and respond-

ents Safeway Stores, Inc., and Holsum’ Baking Com-

‘pany, corporations; and respondents’ representatives,

_ agents and employees, directly or through any corpo-

rate or other device in or in connection with the offer-

ing for sale, sale or distribution of bread, do forthwith

cease and desist from: a :

_ Entering into, carrying out, continuing or cooper-

_ ating in any planned common course of action,

understanding, agreement, combination or conspiracy

between or among any two or more of said respond-

ents, or members of Bakers ‘of Washington, Inc., or

between any one or more of them and others not

" parfies hereto, where any one or more of the parties

to such ptanned common course of action, under-

standing, agreement, combination or conspiracy is

selling bread in interstate commerce in competition

with bread sold by any one or more of the other -

parties thereto, to do or ty sae any of the follow- |

ing things: _ | au

(1) Establish, fix or maintain prices, terms or

_ conditions of sale of bread, Ruts

(2) Adhere to any prices, terms or conditions of

sale so fixed or maintained, or: |

an”

(3) Peter! or attempt to deter any competitor : a

from; exercising his individual judgment as to

prices, terms or conditions of sale of bread.

‘Ir le > Foheien ORDERED that the complaint porele be, iad |

the same ces is, ar as to: Arthur H. LaLinié,- 7

deceased.

‘Ir Is ‘Pinkie Orpen that respondents shall, within

“sixty (60) days after service upon them: of this order, file.

- with the Commission a report, in writing, setting forth in

- detail the manner and form it » which they have: complied

with the order set fortle h

By the Commision. mmissioner Anderson concurring ~

in the result; Commissioner Elman dissenting ; and Com-

‘missioner Reilly not participating- for’ the Feason _. oa

did not hear oral argument. - pe acs

: Josmpri W: SHEA Be

ae - Joseph W. Shea, &

.* = . Secretary.

‘Issuzp: February 98, 1964

ArtacurED Are: (1) Opinion of hi ‘Commission by ( Com-

_ missioner Dixon Pe. :

ce) "Dissenting opinion by Commissioner

“Elman ’ .

ie

7a

’ UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION _

vee ae _ Docket No, 8309

* Opinion of the Commission

So By Dixon, Commissioner ;

Respondents appeal from the hearing examiner’s .de-

cision holding that they have fixed bread prices in violation

of Section 5 of the Federal Trade Commission Act, 15

USC, 6, ° ..

Bakers of-W ashington, Ine., . isa corporate trade. associ-

ation organized unde: the laws of the State of Washington

for the: purpose of promoting the interests of the baking

industry. ‘ Its principal ‘office is located in the city of

| _ Seattle, and more than half of its 49 members have their

places of business there. The other members are located

in the surrounding cities and towns of western Washing-

ton, particularly in Bellingham, Aberdeen, Tacoma, and

Yakima. The association has ‘‘divisions”? i in’ each of those

towns. e

' The complaint named a as respondents the niuedliadait ite

three officials, including its former secretary-manager,

Arthur H. LaLime, now deceased: ; eight of its members as

,_@

representative of the entire niembership: and two other .

companies, Safeway Stores and Holsum Baking: Company.

The examiner found that the. wholesale and retail mem-

bers of this association had attended frequent association

_ meetings at the Athletic Club in downtown: Seattle; that,

by means of agreements or ‘understandings’? reached at

these meetings, price competition in the sale of bread at

both the wholesale and retail level had been eliminated or.

* lessened; and that respondent Arthur H. LaLime, then

secretary-manager of the association, acting as common

' agent for the several members, had engaged ‘in various acts

D> .

SAOa A DOTA.

Shien ee ee sys,

ELE ES a

——e ’

‘

‘ Wa e

' of suppressing or lessening price competition among the

members of the association.

Respondents take exception to the examiner’s decision

in. four principal particulars. They contend that there has

been no price fixing; that, if such price fixing occurred, it

did not occur ‘‘ini’’ interstate ec mmerce; that, if the associ-

ation’s secretary did in fact cause the suppression of price

competition among certain of the association’s members,

- the évidence is insufficient to hold various of the other

thembers legally responsible therefor: and ‘that, in ° any

event, the order is i aneemnively broad.:

)

‘The members of the association ‘include: both ‘whole-

sale’? and ‘‘retail’”? bakers. As we understand the trade —

terminology a ‘‘wholesale’’ baker is one that produces

(bakes) bread and sells it exclusively to retail establish-

ments (e.g., grocery stores); it does not generally sell

directly to consumers. A ‘‘retail’’ baker, on the other hand,

is one that performs both the producing (baking) and re-

tailing functions.. The’most familiar example is the tradi-

tional retail bake shop with its baking plant in the rear

of the establishment, and ‘its retail sales counter in the

front of the shop. Another is,the ‘‘in-store’” bakery. This

includes the grocery store owner who installs, in one sec- .

Som, of his store, a baking plant and a bakery products

‘‘sales counter,’’ or who permits another party to lease a.

‘portion of his store for such an,operation. The term ‘‘re-

tail’’ baker also includes the grocer that, instead of install-

ing baking equipment.on its store premises, sets up a sepa-

rate baking plant at some other location and then trans- _

ports the self-baked bread to its grocery stores for retail ~

sale. Safeway, a respondent here, has such a plant in ne

Seattle. It bakes a ‘‘private brand’’ bread called ‘‘Mrs.

Wright”’ and retails it at the various Safeway grocery

stores located throughout the western Wartingios market-

ing area.

Ce a ee

29a .

A further aspect of the relationship between the whole-

sale and retail bakers should be mentioned at the outset.

The grocery store that bakes its own bread also handles

the major ‘‘name brand’’ breads. For example, Safeway

buys ‘‘Wonder”’ bread from Continental and retails it

alongside its own self-baked private brand, ‘‘Mrs. Wright.”

Hence Safeway is both a competitor and a customer of

Continental. The small retail bake shops, those that gen-

erally deal exclusively in baked goods, are of course ’com-

petitiors of both Safeway and Continehtal—all are striving

for the-same consumer bread dollars. ; .

-’ It is-undisputed that a number. of these bakers are not

engaged in interstate commeree. Some of them are small

bake shops who do no business of any kind outside the city ©

of Seattle. They bake the bread in Seattle, and retail it

- to consumers in Seattle. Obviously, a price fixing con-

spiracy exclusively among these bakers to regulate their '

prices.in Seattle would be of no concern to. the Federal

-Trade Commission. On the other hand, if it appears that-~

2 ee . . ?

- they have joined in a conspiracy with one or more firms . -

that are fixing prices in interstate commerce, then‘even the 4

most local of these bakers is subject to the federal law..

Pedéral Trade Commission v. Cement Institute, 333 US.

_ 683, 695-696 (1948). :

It is also undisputed that several of these respondents

"are, in fact, ‘‘engaged in’? interstate commerce. Respond- "

ent Continental Baking. Company; a Delaware corporation..

with principal offices in Rye, New York, ‘the baker of

- .*€*Wonder’’ bread, owns and operates more than 70 bakeries

_-in 60 cities located in 29 states and the District of Colum.

bia. It had sales of bread and other bakery products of

more than $350 million in 1960, and more than 27 000 em-

ployees. Respondent Langendorf United Bakeries, Inc., a

Delaware corporation with general offices in San Francisco,

California, owns and operates 11 bakeries in California,

Oregon, and Washington. It had 3,896 employees, and sales

- 30a

of more than $73 million in 1961. Safeway Stores, Inc., a

‘Maryland corporation with its principal offices in Oakland, °

’ California, operates some 2,000 grocery stores in 28 states

and the District of Columbia. In 1960 it had more than

63,500 employees | and sales of more than $2,468,000,000.

Safeway is one of the three mage retail grocery. chains

in the United States. 3

These respondents argue, however, that, ‘while they are

‘‘engaged in commerce”’ and thus subject generally to the . -

jurisdiction of the Federal Trade Commission, the par-

ticular ‘‘acts’’ or ‘‘practices’’. challenged in the instant *

od complaint did not themselves occur ‘‘in commerce.’’ They

contend that counsel supporting the complaint would have.

met his burden on this point only if he had shown that |

state lines had beén crossed by either (1) the price fixing

conspiracy itself, or (2) overt acts committed pursuant to

~ that conspiracy, ‘i.e., sales at the fixed prices. Respondents

. contend that this record shows neither.

‘ Assuming that a conspiracy has been established, and

‘assuming further, for the sake of argument, that the con-

spiracy itself is ‘‘local’’ in the eyes of the law,:we do not

agree that the overt .acts* committed pursuant to it—the

sales subsequently made at the fixed prices—were them-.

_ selves local. First of all, this record shows that several of

_ these wholesale bakers sell something like 1% or less of the

production of their Seattle yy in Alaska.’ Further, it

’ Langendorf’ s Seattle plant manager testified that less than 1%

_ of his sales were made to buyers in Alaska. Tr. 313. According

to his affidavit, n. 4, infra, this amounted to $35,789. 50 in 1960.

‘Tt is-sold FOB Dock right here [Seattle] at our regular whole-

sale prices.”’ Tr. 344. Continental’s Seattle plant manager tes-

tified that he sold less than ‘‘one-half of one per-cent”’ in Alaska.

- ‘Tr. 399. Since his plant has annual sales of some $4.5 million,

this suggests annual sales from Seattle to Alaska of about $22, 500.

- Buchan, with annual sales of ‘some $4 million, sells “‘less than a

fraction of one per cent’’ to Alaska buyers. Tr. 230. Hansen.

- makes some shipments to Alaska also. . Answer, p. 3.

Interestingly enough, respondents claim even these sales, assum-

ing a Seattle conspiracy, are not actionable under the statute.

3la

appears that some Seattle bread is shipped to adjoining

states * and that a small amount of the bread sold im the

Seattle area was in: fact baked in another State.? While

these amounts are not dé i minimis, this case involves a much

larger problem. We think it not only important but neces-

sary that we deal with the question of whether these great

interstate firms can claim immunity from the statutory pro-

hibition against price fixing in regard to the remaining.

99% of the transactions involved, those that took place

- within the borders of the State of Washington.

‘Bakery products, including bread, are highly perishable

(bread, to be considered acceptably ‘*fresh,’’ must be sold

to the ultimate consumer.within something like 48 hours

after baking). And bakery products are bulky in relation to

weight and value, thus making long distance transporta-

tion economically impractical: The result is. that Conti-

nental, for example, instead of baking all its bread in New

_ York and then transporting it into 29 states for sale to

local grocery stores, gathers up the men, equipment, and

ingredients that it needs, transports them to ‘each of the

_ 29 states, erects a baking plant in each, bakes the product

inside the borders of each such state, and sells it inside

those borders. ne. |

They say there is no showing that prices charged to Alaska buyers

“‘affect’’ Seattle prices, or that Seattle sellers are ‘‘interested’’ in

Alaska prices. But this. assumes the inquiry is directed solely .to

retail prices. To-be sure, the price at which an Alaska buyer

regells the bread is of no interest to the Seattle conspirators. But -

we are concerned here with wholesale as well as retail prices. And

_ these sales to Alaska purchasers were made FOB the Seattle docks,

* at the “‘regular’’ (i.e., the fixed) -wholesale price. Hence they

are sales ‘‘in’’ commerée at a price inflated by a conspiratorial

agreement: . Fj

* Safeway (Answer, p. 2). Snyder-ships. some bread to Oregon

. (Answer, p.2). ~ Ps

» 3 Holsum ships bread from its Idaho plant to its Trennery sub-

+ sidiary in Yakima (Answer, pp. 1-2). ;

2

’ of the Federal Trade Commissiow Act.

32a -

- The fact that Continental has ‘selected this method of

doing business in Seattle-is thus due to the nature of bakery

products. ‘It appears that, because of the bulk and perish-

ability of bread, something on the order of 150 miles is

the maximum distance from the baking plant it can be.

economically marketed. : Here the Seattle. marketing area

(see Map of Washington,‘ p. 7) runs generally from Seattle

to the Canadian border on the north; to the Pacific Ocean

on the west; to Yakima (Washington) to the southeast ;

and to the Cascade mountain range to the east. None of.

these market boundaries are more than 150 miles from

Seattle. This is the area this trade association has selected

for its theater of operations. Within it, respondents’

prices are the same. When the retail price of bread goes.

from 33¢ to 34¢ in Seattle, it also goes up by precisely

that amount-in Bellingham (about 100 miles to the north),

in Tacoma (some-25 miles south of Seattle), in Aberdeen

(near the Pacific, roughly 100 miles west of Seattle), and in

Yakima (over 100 miles southeast of Seattle). Yet, be-

cause this marketing area is well ‘‘inland’’ from the bor- ° .

ders of any adjoining state, respondents contend that, .

if they fix prices in this drea, they are beyond the reach

Respondents claim support for their position in Federal

Trade Commission v. Bunte Bros., Inc., 312 U.S. 349 (1941). —

There’ Bunte, a manufacturer of candy, made the candy in

Illinois, and sold it in Illinois. The Commission, finding

that Bunte was selling its candy in Illinois. by means of a

‘‘lottery’’ scheme, and that it therefore enjoyed an unfair

4 Attachment, affidavit of Al Moore, manager of Langendorf’s

plant in Seattle, filed July 13, 1961. (For a deseription of the

marketing area of Continental’s Seattle .plant, see attachment,

affidavit of Covington, plant manager, filed July 10, 1961. The

Yakima area is.served by another Continental plant, the one located

in Portland, Oregon.) |

_ 51t appears that these respondents do not sell their bread in

Canada because of a ‘‘duty’’ Canada imposes. :

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| 33a

advantage over out-of-state intl who could not"

lawfully sell their competitive candy across the state line

into Illinois by the ‘‘lottery’’ sales method, concluded that

Bunte’ was adversely affecting interstate commerce and

ordered it: to céase and desist.. The Supreme Court re-

é' petsed, pointing out that the Federal Trade Commission ~

Act, by its express terms, reaches only ‘ifair. acts or

practices ‘in’? interstate commerce, and hence does not

‘include those that merely ‘‘affect’’ interstate commerce. . _

_ The Bunte ca8e is not in point here. This complaint alleges _

that these respondents have fixed prices ‘‘in’’ interstate

commerce.

‘We think the ouniesliien case ew here i is not to be found =~

in Bunte, but in Federal Trade Commission v. Cement In-

stitute, 333 U.S. 683, 695-696 (1948), and in United States

v. South-Eastern Underwriters Assn., 322 U.S. 5383 (1944).

In the first of these cases, the Northwestern Portland Ce-

ment Company engaged wholly i in intrastate commerce, en-

tered into a planned, common course of action with others

who were engaged ‘in interstate commerce. The planned,

common course of action restrained price competition.

There. the Supreme Court held that ‘‘the fact that one or

two of the numerous participants in the combination hap-

pened to be selling within the borders of a single state is

not controlling’ in determining the scope of the Commis-

sion’s jurisdiction.’ “In the second of these cases, namely

South-Eastern Underwriters Assn., an association ‘of fire

_Insurance companies had been indicted under Section 1

and 2 of the Sherman Act*® for fixing. fire insurance premium

rates Aprices} and aempeng to monopolize the fire in-

a o>

# While Sherman Act cases are not applicable to Federal Trade

Commission Act ‘‘commerce’’ problems when the former turned

on whether commerce had been ‘‘affected’’ by the acts charged, ~~

such cases dre of course binding precedent When the issue, as in

South-Easte Underwriters, was whether those atts occurred ‘‘in”’

interstate co imerce. :

. gurance business, in six.

a

—~, °

Southeastern states. The district

court, ‘relying upon Paul v. Virginia, 8 Wall. 168 (1869), ar

chad sustained a demurrer on the ground that insurance °

simply was not commerce at all, either Toeal_or interstate. °

The Supreme Court reversed. — ele a

~

es

One of the contentions of the defendant insurance com- >

. panies (more than half of which maintained: their: home

L

al

offices in either New York, Pennsylvania or Connecticut,

employing ‘‘local’’ agents to solicit ‘‘ local’’ customers for

them in the Southeastern states) was that the insurance

policies sold by their agents were ‘‘local,’’ not interstate,

contracts. The Court replied: ji

a type of mechanical criterion which this Court

has not deemed ‘controlling in the measurement of.

federal power. * “* * We may grant that a contract |

_ of insurance, considered as a thing apart from ne-

gotiation and execution, does not itself constitute com-_

merce. * * * But it does not follow from this that

e the Court is powerless to examine the entire trans-

action, of which. that contract is but a part, in

order to determine whether there may be a chain

of events which becomes interstate commerce. Only

by treating the Congressional powér over commerce

among the states as a ‘‘technical legal conception’’

rather than as a ‘‘practical one, drawn from the course

of business’? could such a conclusion be reached.-

Swift @ Co. v. United States, 196 U.S: 375, 398. ..

In short, a. nationwide business is not deprived .

of its interstate character merely because it is -

built wpon sales contracts which are local im na-

ture. Were the rule otherwise, few businesses

could be said to be engaged in interstate commerce.

- * 322 U.S. at 546-547 (emphasis added). _

SS)

But this reason rests upon a distinction - between |

what has been called ‘local’? and what ‘‘interstate,”’

ale bs

—— a abe, fp or

; 7 35a d | , ‘é

eS Describing the activities of the defendant insurance

companies that, were in interstate comfnerce, the Court

said: =.

| And in great detail the oe aan set out these total

; activities, of which the actual making: of contracts

a was but a part. As recognized by the District Court,

the insurance business described in the indictment — -

included not only the execution of insurance contracts

but also negotiations and‘events prior to execution-of —

-»- the contracts and the innumerable transactions neces-

* sary to performance of the contracts. All of these al-

leged transactions, we shall hereafter point out, con-

; stituted a single continuos chair of events, many of

. __ which werd multistate in character, and none of which

* * * Gould possibly have been continued but for that

" part of them which moved back and forth across state

lines. 322 US. at 537 (emphasis added). ° |

The sé-called ‘local’? porn of these dreiianthlens had

no separate existence of their own. The feet of éach. trans-

action were planted in a single, southeastern state, but the

_ whole body stretched across several states to its. guiding

_— member—the head—in one of the financial centers of the

east, either New York, Pennsylvania, or Connecticut.

This busines is not separated into. 48 distinct terri- .

torial compartments which function in isolation from

: each other. Interrelationship, interdependence, and in-

* tegration of activities in all the states in which they

einirhates are practical aspects of the insurance com-

panies’ methods of doing business. A large share of ©

the insurance business is concentrated in a compara-

_ tively few companies located, for the most part, in the

financial centers of the East. 322 U.S. -at 541.

“*

36a

ay oa

er soptinnows, life-giving stream flowed back and forth.

between the head and those distant —

Premiums ‘collected from ileaieles: in every part

of the United States flow into these companies for

investment. As policies -become payable, checks and

‘drafts flow back to the many states where the: policy :

holders reside. The result is a continuous and indi-

_ visible stream of intercourse among the. states com-

. posed of collections of premiums, payments of policy

_ ‘obligations, and the countless documénts and: commu-

nications which are essential to the negotiation and exe-. ©

cution of policy contracts. I bid. (emphasis added).

‘The channels and. instrumentalities of interstate com-

merce—telephone, telegraph, mail, and traveling agents—-

were used to effect the ‘so-called **local’’ sales.

Local agents solicited prospects, utilized vite forms

sent from home offices, and made regular reports to.

their companies by mail, telephone or telegraph. Spe-

~ ~eial travelling : agents supervised local operations. 322

U.S. at 542. | ee a

The terms on which the “‘local’’.purchasers bought, and

the value of what they got for their money, were deter-

- mined not by the “local” salesmen, ‘but by ; wre tcaaate

management: : |

Individual policyholders living j in many different states.

who own policies in a single company have their sepa-

rate interests blended in one assembled fund of assets

upon which all are equally dependent for payment of

- their policies: The decisions which that company makes

at its home office—the risks it insures, the premiums it

charges, the investments it makes, the losses it pays—

concern not just the people of the state where the home

office happens to be located. They concern people liv-

—

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_ ing far beyond the houndaries. of that state. 322 U.S.

at 541-542°

a In the instant case, at least three of the respondents do

‘business in substantially the same manner as those insur-

-ance‘companies. On November 29, 1961,-Continenfal, Lan-

gendorf and Safeway entered into written stipulations with

counsel gupporting the complaint describing the interstates —

character of their operations. The stipulation with Conti-’’

nental, set. out, in part in the footnote below,’ is substan-

tially the.same as the other two. .‘‘Continental operates.on

- -an integrated basis: Ingredients for the products are pur-

_ chased centrally [New York] and ‘receipts from sales go.

into a single.treasury [New York] * * *.. Each element.

of Continental’s bread and bakery product business is part

of an integrated whole.”? * °

'. The sales involved here are physically made through what

' are called “‘driver-salesmen,’’ employees that generally

74. Continental is regularly engaged in interstate commerce in. |

_ the sale and distribution of bread and-other bakery products. . °

5. Membership in Bakers of Washington; Inc. was made in Con-

tinental’s name and approved at headquarters. Rae

_ 6. Continental assumes legal responsibility for the acts of its

‘plant manager in Seattle as to which testimony was taken. ;

7. Continental operates on an integrated basis. . Ingrecients

for the products are -purchased centrally [from central offices in

New York] and receipts from sales go into, a single treasury [in

New York]. 1

8. Ultimate responsibility for company affairs is vested ir. top

management personnel at the company’s general offices in Rye, New

York.

ness is part of an integrated whole, The company is a single busi-

ness entity and benefits or suffers from what is done locally by and

through each plant or office. rai foe

10. The control over operations which rests in plant managers,

beyond that which is peculiar to the position such as the house-

keeping functions, is vested in them by delegation from top man-

' agement, —

=, - 9. Each element of Conti:ental 's bread and bakery product busi- ©

< \ ? . . : .

ACs ois 38a:

shims both’ the sulting and delivery ‘iain Each

_ driver-salesman is assigned a specific ‘‘delivery route,”’

- generally a given number of city blocks. Continental serves

_ 71 delivery routés from its Seattle plant. On those deliv- .

ery routes, the driver-salesmen make deliveries to those

stores that have already agreed to accept their product,‘and

attempt to healt those stores that have not yet been. “per-

suaded to do 80. a, :

There is no laibestion here that these sales hove to us

‘‘approved’’ by Continental’s New: York management. We- "

have no doubt that they are “‘local”” sales in'the sense that,

in an-action for the price of goods sdld and delivered, the

law of the State of Washington would be controlling. But

that is the “atype of mechanical criterion’’ the Supremé '

Court rejected in South-Eastern Underwriters. A pur-

chase-sale transaction under the trade regulation law is |

considerably more than this. We must, instead, ‘‘examine

the entire transaction, of which that contract i is but a part,

in order to determine whether there may bea chaifl of »

- events which becomes interstate commerce.’’ Here, as

' there, the business involved includes not only the execution

of the contracts; ‘‘but also negotiatiéns and events prior

to execution of the contracts and the innumerable trans-

actions necessary to performance of the contrac

9

The instant record provides us with very little informa-

tion as to the ‘innumerable transactions necessary to per- -

formance of the contracts’? entered into by’ these local

driver-salesmen on behalf of their out-of-state employers.

From the stipulation quoted above, we know that Conti- ©

-nental’s plant manager in Seattle does not buy the ingre-

dients or raw materials that go into the bread he sells; all

_ purchasing is done for him by a central purchasing allies awe

~ located at the » company’s. headquarters in New York. And

from his testimony and certain exhibits we know also that

there is a *‘chain of command”’ running from his plant in’

Seattle, Washington, toa “Regional Office’’ in n California,

—_

ancl

Sa |

~and thence to. top management in New York.’’ When he

_ wants to increase prices, the plant manager writes to his

regional manager in California asking for approval. The

_ regional manager, in turn, gets approval from headquarters ~

New York. fact, it appears that the president of

Sea personally approved the ‘price increase. in

38.°)

' From this: ‘‘bare hice” sie we see ie the broad

' ‘contours of the taut strings that tie the Seattle plant .

“manager to his out-of-state employer in New York.’ For-

tunately, ‘however, ‘this Commission knows considerably

more than this about Continental’s over-all operation. On ° —

October 27, 1959, we issued our complaint i in a proceeding

. entitled In the Matter of Continental Baking Company, .

-Dkt. 7630, charging this’ same : ‘respondent, Continental

Baking Company, with violating Sections 2(a) and 2(d)

of the amended Clayton Act by granting discriminatory

price concessions, and discriminatory ‘promotional allow-

ances, to certain Sevored customers. On March 8, 1963, the

hearing examiner issued his initial decision diemissing the

complaint. He found that, while the discriminations had |

occurred, dnd while the discriminations in price may have

the requisite adverse effects on competition, they were not ©

__-Violative of the-statuté because they had been granted to

meet the equally low prices and‘ equally attractive promo-

tional allowances of competitors. That initial decision was |

affirmed by this Commission on December 31, 1963.

_ One of the principal issues involved in that proceeding

was similar to the instant problem—namely, whether, when .

one of Continental’s ‘‘local’’ plants discriminated-in price .

between two customers located in the same state in which

=a “the bread was baked, either of the two “‘purchases involved _

in such discrimination”’ was ‘‘in’? commerce. Section 2(a)

°Tr. 420-427 ; CX 234-29. | eas nAes

® CX 235. ;

— 40a iN 5

of the Clayton Act, as ‘amended (emphasis: added). The

hearing examiner held that those purchase-sale transactions

" were ‘in’? commerce. ee

fe In reaching this conclusion, the, hearing examiner had -

the benefit of an. adjudicatory fecord that explored the

structure and operation of Continental’s ‘business with

highly commendable thoroughness. Under the principle

that a tribunal may take notice of its own records in other

cases,” we take, official notice , of - the following facts

: ae

10“*We may notice the record of that case in this court.’’ Na- -

tional Fire Insurance Co. v. Thompson, 281 U.S. 331, 336 (1930).

See also Virginian Ry. Co. v. System Federation No. 40, 300 US.

515, 546, n. 4 (1937) (quoting testimony from another case) ; West

Ohio Gas Co. v. Public Utilities Comm. (No. 1), 294 U.S..63 (1935) ‘

- (noticing evidence in record of a companion case between same——

- parties) ; Crithton v. United States, 56 F. S p. 876 (S.D.N.Y.

1944), aff’d., 323 U.S. 684. (1945) (IG€ noticed record of. earlier’

case involving same party) ; ; ‘Davis, 2 Administrative Law Treatise

.- +838, 381-384.

~—~ “As we understand it, the propriety of taking official notice of

facts, whether such notice is taken at the beginning of a proceed-

ing or in the agency’s decision, turns-upon‘ whether the party is

afforded an opportunity to challenge the facts so noticed, if it

desires, and thus to correct any errors the tribunal may have made. .

United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, *

. 528-580 (1946); Davis, id., at 388, 394, 400, 441; Davis, ‘On

Official Notice,’’ Proceedings of the Federal Hearing Examiners’

First. Annual ‘Seminar, 13,.22 (September 23-25, aA ’ Section

oe Td) of the Administrative Procedure Act provides: < ‘Where any

agency decision rests on official notice of a material fact not ap-

pearing in the evidence in the reeord, any party shall on timely

request be afforded an opportunity to show the coritrary.’’ Section

3.25 of our Rules of Practice authorizes the filing of a ‘‘petition

for teconsideration’’ of any Commission decision. Should Con-

_, tinental desire to challenge any of these noticed facts, it will thus-

have an opportunity to do so in-such a petition for reconsideration,

‘those particular factual statements it wishes to dispute,

and setting forth, preferably by affidavits of knowledgeable per-

, Sons, the true facts i in those particulars. .

It appears, however, that these noticed facts are undisputed.

They were taken from another record aia: the same party;

-

ae Oy

. °

Ad ais re S10

developed’ in that record through documentary -evidence

secured from Continental, and by examination and cross-

examination. of Continental’ s officials and employees :

. AL Corporate organigation, Ultimate. responsibility for

corporate affairs is centered in the. company’s headquarters

im Rye, New York. The headquarters staff ‘is functionall

divided into several. is divisions, ” on, ™ see

‘‘sales,”? etc. | er

a

er aie ;

The ‘company’s multistate opération is divided into a

number of ‘‘Regions,”’ Each **regional office’? j is 3 assigned,

by headquarters, a given geographical area, an’ ‘area that

_ generally includes several states and, of course, several

baking plants. The regional office staff, like the head- “a

quarters ‘staff, is functionally divided into a number of

divisions of departments. Each of these. has a department

head that reports to the ‘‘regional ‘manager.’’ He has

(1) a ‘‘Regional Sales Manager,’’ (2) ‘a “‘Regional Produc-

tion Supervisor,”’ @) a ‘‘Regional Cost Analyst,’’ (4) a.

they were presented there through the: party’s owni officers,: em-

ployees, and written records; they were adduced there for the

same purpose as here (to chow interstate commerce) ; and cross-

examination and opportunity to present rebuttal evidence were

afforded. These facts were then found by the examiner and set

forth with great particularity in his initial: decision in that case

(Dkt. 7630, initial decision filed March 8, 1963, particularly pp.

i e . ?, :

; enn ces hi na Senn AILS EE

>

~ 11-21). On its appeal ‘to the Commission, Continental challenged _

the examiner’s legal conclusion that those facts evidenced inter- '

state commerce, but made no effort to dispute any of. the factual

findings themselves. We could, ‘of course, remand the: instant case

' for the taking of this same evidence a second time. And on a

proper- showing of the necessity therefor, we would do so. But

until such a showing has been made, we are guided by the prin-

ciple that ‘‘the intelligent functioning of the administrative process

' demands that the Commission [ICC] .be not required -to indulge -

in lengthy evidentiary, recapitulations of matters just decided in a*

companion case.’’ Crichton v. Umted — supra, 56 F. Rupp.

aa Baie

‘ ‘Regional: Vehicular niutnied (5) ac “Regional ;

< Engineer,”” and (6):a ‘‘Regional Personnel Director.” it

| This form of organization is, in effect, repeated at the

bakery or plant level:’ The ‘‘plant manager’’ is responsible —

to his immediate superior, the ‘‘regional”? manager. The

- plant manager has several divisional or departmental .

‘heads to assist him. He has: (1) a.‘‘Sales Manager,”’

(2) a.“‘Skop Superintendent,’’ (3) an ‘‘Office Manager,”

(4) a ‘‘Fleet Superintendent,’’ (5) .a “Chief Engineer,”’

and (6) a ‘‘Chief Janitor.” :

B. Territorial aeiaidig: New York ‘wainwenen

controls the geographical territory senved by eac#regional

office.. ° It rearranges these sémetimes, taking a baking

plant (or a distribution ‘‘depot’’) out of one region and ~

putting it under the jurisdiction of another. The regional

office, presumably with the approval of the headquarters

sales manager, controls the ‘territory to’ be served by each

Sof the local baking plants. It can. have a particular plant

manager confine his sales inside the state in which his plant —

is located, or it can have him sell across state lines. _ Local

‘plant’ managers are assigned, promoted, and transferred j

-from one plant to another, and from one ‘‘region”’ to

- another.

At the bakery level, the plant manager divides his’ ter:

ritory into .‘‘delivery routes.’”? Such a route might be

10 blocks long, or only two blocks, depending upon the

“density” of the’‘‘stops”’ on that route. (A “stop”? is

a customer, e.g., a- ny store that buys Continental

products.) 4 ee

C. Purchasing. Continental ’s baking seg in 29 states

secure the raw materials or mee: needed in the baking

‘11. In the Matter ‘of Continental I Baking ciel Dkt. 1680,

tr. 712.

12 Td., at tr. 366.

~ 2 Heer ae Aen mnetemenninn Semmens Ih

.

° .

of their goods by sending a “requisition,” apparetitly

‘through the regional office, to the company’s ‘purchasing

division’’ in Rye,'New York. It does this by sending in,

each and every week, a ‘‘weekly inveritory’’ ofthe supplies

: it has on hand.. From these, headquarters does the order-

ing « ‘‘automatically.’’ : The.’ suppliers. of the ‘ various

products needed by Continental’s 29-state bakery operations .

are themselves located in many different’ states.. Upon .

receipt of an order from Continental’s Rye, New York, ©

purchasing division, the suppliers deliver, in many

instances across state lines, to whatever baking plant is

indicated. Payment for ingredients i is of course made by

the purchasing -division in New York from: aed central

New York treasury. .

~D. Production. Neieliienial in oak of its efforts to "

maintain ‘‘a rigid standard of quality throughout the -

. eountry,’? issues ‘Production Bulletins”’ ‘prescribing in

‘exact detail the production standards its plants are to | -

follow. ‘The regional production supervisor ‘tig * con-

_=stantly in touch with the ‘plants.’’.

E. Pricing. The local piant managers can only ‘“‘recom-

mend” prices. The regional office, presumably with the

approval of the headquarters sales manager, determines

prices. To get permission to. vary his prices, either -

generally or to a particular customer, the plant manager —

submits a request to his regional superior.

‘FM oncy collected. from sales. Continental’s local

baking ‘plants have no control whatsoever over the money

collected from their sale of Continental products. The

bakery has two bank accounts. Money collected from cus- -

' tomers is initially deposited in a ‘general?’ account, and

then periodically transferred to.a New York headquarters’ .

bank. For its own local expenses, the bakery is given a-

*‘local’’ account. From this-account, it can méet its pay-

18 Td., at tr. 714-715.

44a

roll and make certain other ‘‘miscellaneous’’ expenditures. -

Except in case of emergencies, the purchasing of -the local |

plant manager is limited to expenditures of $50 or less

‘($300 for engineering services). For expenditure of more —

‘than $50 the plant manager must send a requisition to

. headquarters. | As ,to the money, received from the sale of ©

- Continental’s products, he is simply a collection agent -

*«

‘for the headquarters treasury. : .

G. Accounting. Continental’s baking plants follow- an

Ba esp cite ae Sr ve

“-aecounting system_prescribed by the headquarters office in...

New York. Each week they submit a report that gives

‘the home office in New York a complete breakdown on the.

~ past week’s ‘production, sales, percentage, of ‘‘returns,’’ ~

ete. The bakery also submits a weekly ‘‘profit and loss’’

statement. A ‘Travelling Auditor’’ audits the. bakeries’

‘books: twice a, year, and may also make -additional visits.

The regional cost analyst also checks on the bakeries.15~

H. Personnel.’ Continental’s bakery manager ean hire

and’ fire employees below the ‘‘department head’’ level.

. -He must have regional ‘‘approval”’ before he can hire, say

‘a “yrodugtion supervisor,’ or a ‘‘sales supervisor.’’ The

- regional ‘‘personnel director’’ helps the plant personnel...

man with such programs as the ‘‘student program which we-

- earry out ‘at each plant,’’ that is, recruiting from local

edlleges. Also, the regional personnel director ‘‘is a sort

of liaison operator working with the plant personnel man

in clearing ideas on safety programs and clearing the dis- -

tribution of thoughts on hiring, training, et cetera.”’ 7¢

L Insurance. All group life and health insurance, for

all Continental employees,:is purchased by the ‘‘Insurance

Department”’ in Rye, New York.” oh

4

—-47d,, at tr. 526-527, 601-602.

- Id, attr. 716. < |

- 16 Td., at tr. 712-718.

17 Id., at tr. 719.”

45a a,

-J. Engineering. The regional engineer ‘‘irons out the

engineering kinks’’ at the local plants. ‘‘He is very im-

portant. A plant ‘will develop a new’ manner of. main-

tenance. He picks it up at one plant and passes it on to

the next plant, such as it might help their: efficiency and

maintenance’ problems, and so forth.’’ |

Sy £ Vehicles. The _ Tegional “vehicular supervisor’?

assists the local plants in the maintenance and operation ©

of their truck fleet. eee .

L. Sales, ‘The regional manager’s responsibilities ‘‘are

to operate the business and the bakeries under my control _

-and try to make some money. * * * I am responsible for

pricing in the trading areas that I have ‘charge of.’’

He is responsible to headquarters for the sales-volume of

each of. his bakeries: ‘‘I, rin ‘sales figures for my region

constantly.’’*°. To assist him, he has a ‘regional ‘‘sales

manager,’’ whose duties are to: ‘‘Call on the bakeries, work

with the sales departments to develop sales, help them ‘to

develop sales campaigns, help in getting the right kind

of sales people, help to-train them, and make store contacts

when necessary.’’?! ‘*He is in-contact with all the plants

‘im my Region. Each plant. has some. kind of. sales

_ activities going on constantly. Various sales promotions, '.

various sales. activities and the regional sales manager’s

job is to go around [to] the plants and confer with the . .

- plant manager and insure that these are activities that are

going along, and general contact with the activities of each

plant, in the direction of sales.’’ . a

18 Id, at tr. 715-716,

- 19 7d., at tr. 1837.

20 Id., at tr. 1888,

21 Td., at tr. 1922. -

22 Td., at tr. 714, :

so

M. Labor Relations. Continental has ‘“‘a Labor Relations ae

man’’ thaf. ‘‘functions for. my region and several others

*-* *, He is the one that negotiates the contracts.’’ *

N.. Packaging. Continental, at its: New York head-

- quarters, has an ‘‘art department’’’ that designs most .

of the packages and ‘wrappers in which its bakery products

are sold (e.g., ‘‘Wondér’’ bread). However, if a bakery .,

manager feels strongly about oe design, it won’t .

‘be forced on him.

O. Advertising. In 1961, Continental’s bread sales were

_ approximately $187 million. About 6.5% of that:total was

spent for advertising. Most of this is local or regional,

except for some national TV ‘advertising. Newspapers,

radio, TV, and billboards are the principal ‘Inedia bases

- National magazines are not used. “

Virtually all advertising i is placed from headquarters in

New York, and is paid for from New York. The company

has its own ‘‘Advertising Department’’ at headquarters.

Further, it retains a New York advertising agency to

- handle its account. Local bakery managers can ‘“suggest”’

ads they would like to -see run in their local areas, but —

the preparation of the ad copy, the making of the arrange-

ments with the local media (newspapers, radio and TV

‘stations), and the payment of the media’ 8 ‘bill are all if |

headquarters’ ‘functions.

Thie home office also prepares - ‘‘point- of-guickane”’

advertising material (signs to be put on the grocery.

store’s bread rack, signs for its windows, etc.) for the

local bakeries. The home office keeps the plants informed

of the material available, and sends it to them from

New .York. on bh araste

ete

28 Td., at tr. 713-714.

SS LOREAL SON a OP BIOS atte Ae

oOo

47a

While the local bakery does not prepare, place, or handle

the paymen! for adyertising conducted in its trade area,

the costs incurred by headquarters are charged to the

‘ bakery.** jae = ar

We think the foregoing facts bring Continental’s sales

in the State of Washington squarely within the ‘rule of —

South-Eastern Underwriters that. a purchase-sale trans-

_action includes not only the ‘‘execution’’ of the contract

“but also negotiations and events prior to execution * * *

and the inaumerable transactions. necessary to perform- ~

_ance.’’ Here, the acts by which technical title passes from

Continental to its grocery store customers are obviously

a small part of Continental’s total. operation. Its local

sales agent can easily agree to deliver on consignment a’

dozen loaves of “‘Wonder” bread every Monday, but

“‘innumerable transactions,’ many of them directly ‘‘in?’

interstate commerce, -are “necessary to performance.’’

The work of Continental’s driver-salesmen is merely the

_ peak of the iceberg; beneath it, sunk deep into the stream |

of interstate commerce, is the real body of the transaction.

We find that all of Continental’s sales. in the State of.

Washington were ‘‘in’”’ interstate commerce. All of them

involved a New York seller and a Washington buyer. Fach

of them: was an indivisible part of a host of ‘‘transactions

* * * [that] constituted a single continuous chain of

-events, many of which weré multistate in character, and

none of which, * * * could possibly have been continued

-but for that part of them-which moved. back and ‘forth

~ across state lines.’” South-Eastern Underwriters, supra,

322 U.S. at 537. es |

We think this result is also in full accord with the Court’s

_ decision in Moore v. Mead’s Fine Bread Co., 348 U.S. 115 -

4 Id., at tr. 457. Pee a

; "48a

(1954),25 and with the Fifth Cireuit’s recent opinion in

Shreveport Macaroni Mfg. Co., Inc. v, Federal Trade’ Com- —

mission, 321 F.2d 404 (1963), cert. denied, January 6, 1964.

In the latter case it was squarely held that purchase-sale

transactions way be ‘‘in interstate ompearee although

the deliveries * * * [are], intrastate.’? 321 F.2d at

407 (emphasis added). Until the Supreme Court resolves

whatever conflict may exist between -this case and Willard

Dairy Corp: v. National Dairy Products Corp., 309 F.2d

943 (6th Cir. 1962), cert. denied, 373 U.S. 934 (1963), we |

feel bound to follow the Court’s clear reasoning in South-.

25In that case, a private treble damage action brought under

the Robinson-Patman Price Discrimination Act, the Court found a

. discrimination ‘‘in’’ commerce where the defendant, operator of a’

bakery in Clovis, New Mexi¢o, cut its prices inside the State (in .

Santa’ Rosa, New Mexico), ‘thereby injuring a. local competitor,

while keeping its prices high on. sales made nine miles across the

border in Farwell, Texas. To be sure, the latter sales were enough

to meet the technical requirements of the statute. But they were ©

- trifling in amount, by arly standard. Farwell, Texas, in 1950, had

-_@ population of 400. Assuming the defendant had all the bread

business in that town, that it received its full wholesale price of

14¥ per loaf, and that every man, woman, and child in town con-

sumed half a loaf of bread per day, the defendant’s gross sales -

there would have been no more than $28 per day. Assuming a

net profit of 10% of gross sales, it could not have‘netted more than

$2.80 per day on its Texas sales. (See analysis in Proposed Find-

- ings and Conclusions of counsel supporting the complaint, Con-

tinéntal Baking Co., Dkt. 7630, submitted December, 31, 1962,

p. 59.) The injured New Mexico competitor won a judgment of

$68, 400. If the Farwell, Texas, sales were the keystone in the

Court’s decision, then the holding is simply that the defendant

* used poor financial judgment in letting its trucks wander nine

miles inside the Texas border: it would have had to retain all of

the Farwell, Texas, bread business for more than 75 years to earn .

back that nearly $7 0,000 sum.

“ The real basis for the Court’s decision, we think, was inet that

the Mead plant in New Mexico made a few inconsequential sales in

a small Texas border town, but the fact that Mead was one of

several ‘‘interlocked companies,’’ a member of an ‘‘interstate com-

bine,’’ 348° U. S. at 119, es business in ay atates.

49a

Eastern Underwriters, supra, .and our understanding of

its opinion in Moore, supra. In doing so, we note that

nothing in Willard suggests that the Court-had the benefit

there of the kind of intra-torporate data we have discussed

_ here, ‘a study in depth of the vast substratum of out-of-

state control exercised over, and the never-ending stream

of interstate activities and communications that form the

underlying support for, the out-of-state firm’s allegedly

“‘local’’ sales. This is the “‘economic and business stuff’’

out of which these transactions are.made, White Motor Co.

v. United States, 372 U.S. 253, 263 (1963), and we think

it shows that any other ruling would not only do violence

to the purposes of the statute, but would require this Com-

mission to ignore what our careful study here has led

‘us to believe are the economic realities of present day inter-

state commerce.

| | IT. )

| Respondents contend that the hearing examiner erred

‘in finding that they had, in fact, conspired to ‘‘suppress

competition among and between: themselves and.others in

. the production, distribution and sale of bread” as charged

‘in the complaint. They call it merely'a case of ‘‘conscious

parallelism.’”’ Arguing that nothing has been shown here

but price uniformity, they ‘note the principle that: “An

inference of conspiracy would only arise ftom Similar

business conduct if it appeared more to the interest of

competitors to adopt different practices.”’ Independent -

Iron Works, Ine.v. United States Steel Corp., 177 F.Supp.

743, 747 ( N.D. Cal. 1959) , cert. denied, N ovember 18, 1963.

Respondents further contend that, whatever inferences

of conspiracy might otherwise have been drawn here, they

are affirmatively rebutted by several additional: facts,

namely (1) that there is no community of ‘interest between

' the ‘‘wholesale’’ and ‘retail’? members of the association,

and thus no reason for them to conspire; (2) that there is _

no community of interest, and ‘hence no motive for a con-—

‘

spiracy, between those om that are located in different

metropolitan areas; and (3) that several of the alleged

conspirators said they had lost money during a part of ©

- the relevant time period.

The third contention is wholly - fallacious. Even if it

had been fully established that some of these wholesale

bakers had in fact sustained losses,2* that fact would -be

‘insufficient to rebut a reasonable inference of conspiracy.

While conspiracy is normally associated with affluence on

the part of the conspirators, it is certainly no guarantee

_of prosperity.

is

Nor is there anything in acme? ‘territorial and

‘<functional’’ arguments that negate the existence of a

price fixing conspiracy here. The latter contention—that

‘‘wholesale’’ and ‘‘resale’’ bakers do not. compete with

each other—is patently unsound. For- example, one of

the ‘‘retail’? bakers, Mr. Vincent Noga; operator of an

‘‘in-store’’? bakery in Yakima, testified that while he was

~~ baking and selling his own bread in one section of the

Yakima supermarket where he had his baking operation,

the various ‘‘wholesale’’ brands (including Continental’s

‘‘Wonder’’ bread) were being sold in another section of

the same store, under the very same roof. He had. no

doubt that he was ‘‘competing’’ with the bread baked:

by the wholesaler.” It could riot be otherwise. Wholesale

and retail: prices are tied together by a simple, mathe-*

matical formula. On their loaves of bread, the wholesale

bakers . stamp, for’ the consumer to see, a ‘‘suggested

retail pyiee. ? This is the: price the retail grocer almost

“e Mhow respondents offered no. documentary evidence to sup-

rt’ the claims on this: point. The only written financial data in

ey record is CX. 32, Continental’s 1960 Annual Report, which

shows a‘net after tax ‘profit of over $9 million (p. 6); and CX 34,

Safeway’s 1960 Annual Report, which shows a net on of over

$34. million (p. 18).

“ee ‘ [T]he wholesalers were my main ainitin, * Tr. 626,

%

5la.

invariably charges the consumer. The price he. pays the

wholesale baker is simply that suggested retail price less

20%. When the consumer is paying 34¢ for the regular

loaf, the grocery store ig paying 20% less, or 27.2¢. One:

of the wholesale bakers, testifying in regard to the 2¢ price

increase in 1958, remarked that: ‘‘We don’t get the two

_ cents. We only get a part of that. 20% of it goes’ to the .

retailer, the grocer or the restaurant owner * * *,?720 —

Hence the big wholesale bakers have a direct and im- == _

mediate interest in preventing price competition between———_

_” the retail bakers themselves, and thus’ be e retail

bakers on the one hand and t il grocery stores (the

-wholesalers’ customers) ‘on the other. For example, one.

wholesale baker summed) up his competition this way:

“Well, I was thinking of ‘everybody in. the baking industry.

You know, our competition isn’t just the’ wholesale baker

or the -retail baker’or the grocery store baker or the

house-to-house baker. * * * The housewife can bake her

own bread. *.* * [I]f she, thinks the price is too high,

she’s going to* bake in her own kitchen and she .says she.

' does a better job.’?

As to respondents’ argument that the geographical dis-

_ tances between these various metropolitan areas establishes

_ the absence of competition and hence any motive for fixing

prices, it should be noted first that many of these respond-

ents sell in two or more of the towns in question.*! In .

28 See, e.g., tr. 42-44, 205; CX 31. _—itj.

| Tp, 182. |

Tr. 245 (emphasis added).

51 Of the 49 members of the association, all of whom are respond-

ents in this proceéding (either named directly or through repre-

sentative members), more than half of them have their businesses

in Seattle itself and thus compete with each other in that city.

(CX 8, a list of the members as of date complaint issued, and

amount of dues paid by each, tr. 177, lists 29 Seattle members. ),

The others are located in North Bend, Everett, Kent, Aberdeen,

52a

fact, it appears that Safeway sells in all of them.*2 There-

fore, a break in prices in any one of these towns would

- adversely affect not merely those respondents with baking

‘plants in it, but also those who sell there from baking

plants located elsewhere.

Returning to respondents’ ar ment that ‘‘conscious

spiracy, it should be noted at the outset that this is not a

‘‘eonseious parallelism’’ case. — It is. a conspiracy case.

To be sure, the record shows that these respondents have

‘‘matched’’? each other’s prices ‘with reat diligence.*

_ But the evidence here goes substantially beyond that. The

record shows (1) that these alleged competitors have held

“ regular ‘‘meetings’’ almost every week, generally every:

Mount Vernon, Bellingham, Anacortes, Burlington, Tacoma and

Yakima. All of these towns are well within, 150 miles of Seattle,

> the distance bread can be economically transported from the baking

Sadegs er ebE ua its Sean's

>

-+ parallelism,”’ i.e., uniform prices, does not prove a con- .

plant. (See Map, p. 7.) Buchan has four plants: two in Seattle, .

one in Bellingham, and one in Tacoma. Tr. 179. Continental’s |

Seattle plant sells all the way north to the Canadian border, east <-

to North’Bend, and south te Renton and Tacoma. Tr. 399-401.

For example, it has a delivery route in Anacortes (near Belling-

ham), tr. 438, and thus competes with local bakers there. Langen-

dorf’s Seattle plant similarly sells north to the Canadian line,.

south to Aberdeen, and southeast all the way over to Yakima. Tr.

- 312-313. Hansen has two plants, one in Seattle and one in Tacoma. -

Tr, 288, 294-295. It appears, therefore, that each of the 49 mem-

bers of this association, regardless of the town in which it sells,

is competing with bread baked by. one or more of these wholesale

bakers. out. th ists

. 82 Safeway “ship[s] all over the State of Washington.” Tr, 262. -

883 The hearing examiner’s. initial decision tabulates, at page

13, the simultaneous and nearly simultaneous price increases by

these respondents in the years 1957 (from 30¢ to 31¢ on the stand-

ard loaf of bread), 1958 (from 31¢ to 33¢), and 1960 (from.

33¢ to 34¢). For example, in 1958, four of the largest—Con- .

tinental, Langendorf, Hansen, and Buchan—all raised their prices

on the standard loaf of bread from 31¢ to 33¢ on precisely the same

day, August 11, 1958. a

7

- : ‘

eT a Tk aS ad Patna a a i i i

e °

’ :

2 :

58a.

Monday at the Athletic Club in Seattle; (2) that they

‘*discussed’’ prices-.at those meetings; (3) that, after

certain of. these meetings, the association’s manager’ in-

formed certain of the members that, on a certain date,

. there would be an increase in the price of bread; and (4) ”

that the association’s manager, as well as. his predecessor

in that job, repeatedly called on individual members of the.

association for the purpose of inducing them to refrain

” froth cutting prices, sometimes threatening them with

drastic price retalidtion if they refused to keep their prices

in line with the others.

- Only one company was allowed to deviate from those a

prices—Safeway. While all the other bakers, wholesale

and retail, were pressured to retail their bread for the

_ same price Continental got for its ‘‘Wonder’’ bread, Safe- -

| way was permitted to sell for 1¢ less. It was permitted

> - to do so for the simple reason that none of the others, not

even the big wholesale bakers, had the power to stop it.3+

The result is that respondents have two prices -in this

market: (1) the high, uniform price (e.g., 34¢ in 1960 for

‘ the standard loaf) charged by the group in general—in-

cluding the advertised brands produced by the big whole-

sale bakers (Continental’s ‘“Wonder’’ bread, etc.) as well

as the unadvertised breads produced by the smallest of

the’ retail bake shops, and (2) the 1¢ lower. (33¢) price

charged by Safeway for its self-baked, ‘‘private brand”

bread. . : =

While the association’s by-laws provide for “annua ce

meetings of the entire membership, these are rarely held.

Instead, ‘special’? meetings are called frequently. The

.. Seattle division meets almost every week. ‘‘At times we

34 Buchan, asked why he didn "t meet Safeway’s 1¢ lower price, —

replied: ‘‘Well, I am afraid that we are not financially able to

‘undercut Safeway.’’ Tr. 195. a

bd

S4a

have a meeting ‘every week, not always every week.’?

- he number of special meetings actually held each year

- totals less than 52, but Yhore than 262° ‘While the meetings

in Seattle are usually held on Mondays, and at the Athletic »

Club in Seattle, each meeting is individually called. The

record contains a list of the ‘‘regulars’’ who have requested

that they be notified of all meetings.” Members of the

_ association located in the towns served by the ¢ther four ie

divisions® are not routinely informed of the Seattle: meet-

ings, but are free to, and do, attend if they happen to be

in town2* The manager of the association (then Arthur

‘LaLime) presided at the meetings. eet -

“The ostensible purpose of these. meetings is to discuss

such matters as contracts with labor unions, labor grievance

problems, and regulatory and legislative issues. But the

testimony. of several witnesses who attended these meetings

- makes it clear that the discussions. frequently involved

prices, particulatty the alleged “‘need”’ of the members to

raise their prices in order-to recoup the costs of wage .

increases. : ie

9?

85 'Tr, 36, -‘“Whenever the occasion requirés it,” a meeting is

tr. 14

- CX 7, tr. 175. 23 j

oy

33 As noted, the association has five, divisions; Seattle; Belling-

ham (about 100. miles north of Seattle, and about 20 miles south

. of-the Canadian border) ; Aberdeen (on the Pacific Coast, about

100 miles southwest of Seattle) ; Yakima (slightly over 100. miles |

prior of Seattle); and Tacoma (less than 50 miles south of

e). . i ‘

Tr. 35.. The other four divisions have their own meetings. °

The association’s manager, LaLime, apparently called meetings

in the divisions whenever those members asked him to. He visited

_ the divisions ‘‘[w]henever the occasion requires it. Any time

something happens that would’ require it.’’ Tr. 38 (emphasis

_ added)® He estimated that he visited each’ of the divisions about

10 or 12 times per year. Tr. 38-39. He presided (as chairman)

over all meetings. .Tr. 40. rae hain al ai

» ©

.

Sepp NaS Sabot ane cas rekety te

>) a

Witness Schafer, Seine owner of a ‘bakery i in Belling-

ham, testified. that, as a member. of . the association, he

occasionally attended its meetings at the -Athletic Club.

when he was in Seattle. ‘Whenever it was convenient for

to be down here, I would go to their_noon luncheon ©

which we considered a luncheon and a meeting combined.’

He testified further:

Q. Did you ever hear any discussions of prices or.

price rises when you were at a meeting of the Bakers

he of Washington; Inc.?

Ss A. Yes, sir.

Q. What would be the circumstances of such dis-

cussions? Would ‘they. usually occur around labor ¢

contract periods or what? —

A. That is the reason for raising ’em. * * * Some-

times before and after our.contract was signed. |

Q. Would you hear price discussions at other nerieds

at these meetings or were they generally localized

_ around the. contract periods?

A. Mostly contract periods, yes, °

Q. And what would be the nature of the discussions

’ that you heard? — |

* A. f** * © we're’ going to use red ink if we. don’t

do something about the bread price.’’ 4 :

To the same effect was the testimony of ‘lilies ‘Albert .

Pettersen, formerly a supervieor for a local food store .

chain:

re)

. Q. Now, when you were here in Seattle, Mr. _Petter-

sen, did you ever attend any meetings of. the Bakers

of Washington, Ince., sir?

A. Yes, sir. I attended their Monday’ luncheon bcs

~ the Washington: Athletic — |

"Tr, 488-489 (emphasis added), 490,

. . 7

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eet eer ane

: . a dvitlenlad Sibi ae pedo st ncaa itll Ria Abate 2 ” san i

Q. [Wle have had testimony to the » effect that the 7

price of bread rose in August, August 11, 1958 here’ -

in Seattle, the Seattle area. Do you recall attending

any meetings at the Washington Athletic Club of the

Bakers ‘of Washington, Inc. in which prices were dis-

cusséd, around that period?

ete A. Yes,I did. = .

we Q. What would be the nature of the price discussion

.—— - that you heard? |

i "2 A. Well we discussed the: labor, we discussed our

price of pur material—flour, shortening, sugar. And

labor had jumped so high that they decided that we

i : should have a raise in our bread. From there we just

: ' «took it and they said, ‘‘What do you think about, |

; - certain prices?’’ and they kicked it around and, so.

that 1 is as far as it went as long ‘as qT sat there.* .

ean? ! ‘ 56a

4

; ‘ “After these meetings were over, the witness was notified

. 7 bythe association’s manager, Arthur LaLime, that there-

"Was going to be a price’ increase: |

. Did you receive information that. prices were |

going up after this series of meetings? ©

‘a A. Yes, sir.

_ Q. And how did. ou sia that information? ;

A. Well; I believe it was a form sent to us. Now L

am not sure whether it was a form or he’ called me, —

. Art LaLjime called‘me. I don’t know whether it was

, & paper or telephone ‘call. ;

Q. It was Just the one instance when he called you

or sent, yOu a notice or was there more than one

_ inatarice? Mee

A. Well there was more than one. instance because

ase we weren’t sure on. different items to go up on, like

buns and specialty breads.” Ap eee i on ia

—e

| 41 Ty, 259-260 - (emphasis added).

ia ee

57a

The explanation offered by respondents for the remark-

able coordination of their price increases is that the whole -

thing is a matter of ‘‘price leadership.”’ First, they say,

‘one of the respondents, acting independently of his com-

petitors, decides to raise his prices. Because certain of.

the very large grocery chains insist on it, a written notice

of all price changes is sent to them by the price leader. —

several days in-advance of the effective date of the change.

‘His competitors, through salesmen calling on the notified

chains, learn almost immediately (perhaps the same day

the notice was received) that the price leader will increase

-his prices on a certain date in the future. These com- -

petitors, equally eager to increase their own ‘prices

(respondents’ contend), immediately send. out similar,

notices to the chains. Kor example, four of the principal

respondents—Continental, Langendorf, Buchan, Hansen—

all pieked August 11,.1958, for the effective date of their

1958: price increase. On August 7, 1958—four days

previous—Continental had sent A & P a written announce-

ae ment’ that, effective August 11, 1958, the price of the

standard loaf of bread would increase from 31¢ to 33¢

o> (and similarly on. other bread items).“* The next day—

August 8, 1958—two of Continental’s competitors, Langen-

dorf and Hansen, sent similar announcements to A & P

and their other large chain customers.* Their announce-

ments, like that of Continental, stated that, effective —

August 11, 1958, the price would go up from 31¢ to 33¢.

_ Had these three and all of their competitors made their

announcements on the same date, say, August 7, it would

have been hard to explain; the only inference would have -

been that each had agreed with the others to go up on that

day. But where the first move is made by only one com-

.pany, the others can claim they subsequently and **inde-

pendently’’ learned of : that competitor’s ‘‘independent”’

48 OX 21; tr. 402-403, (These are suggested retail prices; the “

- wholesale price to the grocer is 20% less.) . :

“4 CX 15; tr. 320. CX 13; tr. 297-298. .

58a

siaeniinaeivaiiniat the day before, and thus that the moves of

_ all amount to nothing but ‘‘meeting competition.’’ * —

But some of the baker. witnesses testified that they

learned of their competitors’ impending price increases ©

not from the ‘‘trade’’ (grocery chain buyers) but from

- the manager of the association. For example, witness

Albert Pettersen was quite clear that, although his em--

ployer, Albertsons Stores, was not only a baker of bread

* but.a purchaser of it,** it did not receive written notices of

price increases from its suppliers, but, instead, from the

-association.*7 ‘oo

This was not the only baker witness that testified to the

receipt of such advance. price information from the |

association. Mr. Frank A. Maxeiner, Jr., former pro-

prietor of ‘Model Electric Bakery in Seattle, epeanese as

follows:

Q. Now, during the time Mr. Alford was associated

with Bakers of Washington, did he ever contact you

_ with respect to impending price rises. as to bread?

A. Yes, he called on the plione.

Q. And did this happen on several ‘occasions!

_ A. Yes, it did over the years.

Q. Did he advise you as fo an impending price

rise in bread when he called?

A. Yes; he would usually indicate that we were to

advance the price of bread.*-

4 See, e.g., x 23B, tr. 417, where Continental reported that it

was er its Prices ‘ ‘in order to meet the- ‘competitive situation

* * * 9

46 Albertsons bakes its own private ‘iat bread and sells it in

its own grocery stores. In addition, however, its stores carry the

various ‘‘brand name”’ breads, e.g., Continental ’s ‘*Wonder’’ bread.

Hence Albertsons is both a customer and a competitor of Con-

tinental:

Tr, 265-267,

-* Tr, 282 (emphasis added).

x at al cdl eae — 5 ee Pe eee ee

59a

-In the face of such ‘testimony, we are not ‘‘obliged to

accept as true’’ the denials of the respondents. Girardi v.

Gates Rubber Co. Sales Division, Inc., 325 F.2d 196, 202°

(9th Cir. 1963).. Moreover, even some of the arger

- respondents virtually admitted they discussed prices at .

' their Seattle meetings and knew in advance of their com- —

petitors’ impending price increases. George Buchan,

president of one of the larger respondents, testified as

. follows:

- Q. Were there any other dizenseions at the Bakers »

of Washington, Inc. in connection with the aw |

on labor regarding prices?

A, Oh, I imagine during the ‘nagotiaiions there

were. * *

Q. Did you discuss then what the added costs would

be of the added labor icaapnaile

A. Oh, yes.

On the “question of advance knowledge of competitors’

price increases, the major respondents repeatedly em-

phasized that they had merely heard ‘‘rumors’’ of what

thgir competitors were going to do. But much of this

teStimony had a decidedly equivocal note to it. For

example, a Mr. Covington, Continental’s bread plant

_ manager in Seattle, testified as follows wes the 1960 .

price increases: |

Q. Do you know in advance one way or another

_ when a competitor .is going to raise his prices?

fo have some knowledge of ‘it, yes, sir.

| 2 *

Q. * * * Do you learn of prospective increases,

"that 1 is, do you learn i in advance of the announcement

© Tr, 199-190 (emphasis added). |

See; e.g., tr. 186, 189, 237, 244, 247, 321-322, 335, 412, 443, 449.

|

of an increase that a competitor i is going to make that.

increase?

A. Not too far in advance, no sir.

Q. Do you only learn after some announcement has

been made? Which,is it?

A. I only know fo sure after some announcement

| has been made.*!*

Representatives of the larger respondents were some-

thing less than persuasive when interrogated about how

they happened to have picked a particular date to raise

prices and about the reasons for deciding to raise the price

‘by the particular amount chosen, Thus, the 1957 increase

had been a 1¢ raise, the 1958 increase had been a 2¢ hike, |

and the 1960 jump was for only 1¢ again. Why pick -2¢

one year, and 1¢ another? ‘‘Well, I just didn’t feel that

I could get any more than one cent.’’*? But this doesn’t

explain why he ‘‘felt’’ he could get 2¢ in 1958. In other

words, there were no ‘‘false starts’? here. Each time a |

‘‘price leader’’ raised his prices, it *‘stuck.’? The others

followed him up quickly; the price leader did not first try.

2¢, and then have to ‘‘back down”’ to 1¢. The figure he

_ selected—whether 1¢ or 2¢—was always just the amount

that his major competitors, also exercising their ‘‘in-

-.dependent’’: business judgment, agreed was neither too -

large nor too small for the state of the market.

As to the dates selected for the increases, e.g., August 11,

-1958yrather than, say, a week earlier or a week later, .Mr.

- Moore, manager of Langendorf’s Seattle anit ne

as follows: ; :

Q. Why didn’t you do it the previous Monday be-

cause you were already paying the [increased] labor _

wages?

51 Tr, 412-413 (emphasis added).

52 Tr. 303. és ;

en

b

a

we hang PERI TORE DAY Ci, BORO Need w thee Rs aang,

«61a

." A..T can’t answer that right now because I can’t

think why. ..

. Arthur LaLime, then manager of the association, came _

‘to the job in November of 1957.: He succeeded a Mr.

Alford, who had held the post for more than 20 years, until

_ his death in June: of 1957. This. predecessor had been

regarded by the’ members as the, price ‘‘bellweather.’’

-Witness Harry Schafer,»a baker in Seattle until 1956,

testified as follows: - 3 7 &S

Q. Was there someone looked to in those meetings

to be the bellweather for prices? ig hed

. A. Well, usually the head of the bureau * * *, At

that time it was Mr. Alford." , ,

3 alee

Mr. Maxeiner, as noted, testified that Alford had made .

it a practice, ‘‘over the years,’’ to instruct him by tele-

phone when prices were about to be raised: ‘Yes, he

would usually indicate that we were to. advance the price

of bread.’””™ ~ vec ee yore ; 5)

Victor Goethals, proprietor of a small bakery in the

Anacortes-Bellingham* area, testified that Alford had

threatened him with a ‘‘price war’’. in 1957 “if I do not

put it [prices] up with the rest of the bakers.’ ™ The

58 Tr, 321-322 (emphasis added).

“Tr 491... .

55 Tr, 282.

56 Tr. 50. ‘‘Alford who was in charge of the [association] had

called me and told me to put my pice up. I did not do it for

quite a while until I had. several calls and then he threatened me

to—there might be a price war if I do not put it up with the rest

of the bakers.” Tr. 50. (It appears-however; that the witness —

was mistaken in attributing this particular incident to. Alford.

' Since Alford had died on June 13, 1957, and since the incident

would have logically followed the price increase of July 22, 1957,

¥ some five weeks after Alford’s death, this threat was probably made

either by the ‘‘interim’’ association manager, one Gene Crawford,

or by his successor, LaLime, who took the office in November.)° |

} ,

62a

wenn was similarly threatened the following year. ‘In

1958 I went up because I was ‘almost—well, I was told to ,

go up”’ by.LaLime. ‘‘He said I should put the price of

bread up.with the-rest of the~ wholesalers.’ *~ ‘This, -—~

crease was followed because ‘‘I didn’t want the same

trouble I had before, that I had in 1957.’’°* Asked what.

kind of pressure could be put on him, the witness replied: —

‘‘Well, they can *-* * undersell me and ciaaerd me at any

time. 99 59

In 1960, however, the rae i refused to go up

again. ‘‘I just felt I couldn’t afford to go up because >

you lose too much business by keep yrs and raising

the prices.’’ :

-Another witness, Mr. Bennett Haggen, proprietor of a.

supermarket (‘‘in-store’’) bakery in Bellingham, testified

> that LaLime visited his place of business in the fall of

-1957 to discuss the fact that three local bakers were cutting .

prices. It was a substantial visit. ‘‘One hour, two ie

I didn’t have too much to do.’ ®

| Q. What occurred at this meeting between cumualt

_...and_ Mr. LaLime?

‘A. Well, t believe that Mr. Laliime was just new in —

the territory then and, of course, he came and intro-

duced himself and then because ‘of the situation, we

discussed the bread deal. ae .

The witness did not know whether LaLime had siuilie, .

bs visited the three price-cutters in 1957, but he’ knew that,

“stp, 51. oe i +

58 Tr 54. . a

"80M p, 55.

60 Tr 51,

-@ Tr, 374.

_ 2 Tr, 357. |

: -~-tioned-above, LaLime invited another witness, Mr. Robert —

63a.

two weeks ‘after LaLime’ 8 hci to eit the “*grlee

‘war’? ended.

In 1958, prior to the price raise: of pom 11, men-

Hall, proprietor of a ‘small Bellingham bakery, to attend

a meeting of the local bakers. The witness teatified ‘as

7 follows :

Q. And in ‘the summer of 1958, was a meeting of

bakers held in Bellingham? :

A. Yes, sir.

* * *

.Q. By whom were you invited to attend?

A. The representative for the Bakers of Wachee.

Q. And can. you tell us what transpired at that

meeting?

A. Discussion of prevailing prices, and the —

rise that was about to take place and— = ©, —

he . * “Go aes

Q. Was there any discussion of what Hall’s Bakery

intended to do with its price conduct?

A. Yes. Hall’s Bakery had been known as a cut-

rate bakery and they would like to have us join and

follow on line with the rest of the bakeries.

Q. And did you refuse to’ do that?

_ A. I told them that-we still had Hall’s Bakery name

on our place of business and we were maintaining our

own yum of business.

‘ * * °

Q. ‘Did Mr. LaLime ever tell you to eet your prices

up? %

A. Mr. LaLime told me that, for instance, if Wonder

Bakery. [Continental] cared to bring up:bread in

63 Tr, 366.

64a

Bellingham and sell it’as an unbranded loaf of Te

for 10 cents a- loaf, what would that do for your

business? * * * He did not say they were be to,

_ he said: ‘What if they did?” * |

Mr. Albert Pettersen, former bakery supervisor for the |

Albertson grocery chain, testified that LaLime, the associa- ‘

tion’s ‘manager, had.thrdatened him with a “bread war’’

unless he stopped advertising his bread at a cut price.

In 1959, the ‘‘regular price’’ of raisin bread had been 26¢°

. per loaf. The witness ran an ad in a Seattle paper on

August 3, 1959, offering it for sale at 19¢. Asked if the

ad caused any ‘‘repercussions,’’ the witness said: ‘‘ Well,

the Association called me and told me that I shouldn’t run

raisin bread at 19 cents. * * * Well, he thought maybe

we might have a bread war if\ I keep ered around with.

_ the price of bread.’

The smaller bakers in ii areas. testified to efforts of

competitors and the association’s manager to persuade

them to raise their prices. Mr. Ralph Hall, brother and

partner of Robert Hall, mentioned above, testified that ‘‘it ;

was suggested by Mr. LaLime on two different occasions

that he thought: we could get more for our bread and more °

in line with what the other fellows were getting. However, »

we ignored all his suggestions and in fact told him that

we would not raise the price.’’* One of those occasions

was in 1959. ‘‘‘ Well, in this regard, he was up there—the

last time in 1959 he was there and he asked us—when this

last bread war was going on, he asked the reasons. He

came in one day and he asked me all about this price that ©

we had on the window and asked us -who had started this

’ 4 Tr, 466-468 (emphasif“added).

6 OX 12, tr. 250.

66 "Tr, 255-257, 273.

De, 47T-ATB.

thing and ‘all e 9; Well o.0'O i tsked me mn er these

things, I mean, he was asking me about them and, of course, —

the only thing that I can go on, he was the represenfative .

-- for the Washington State Bakers Association and I had a

talk.with him and that’s what he was there abou eee,

As my memory of the conversation goes he said to me:

‘There are several of the other stores now that are getting

32 cents a loaf and we are wondering if. you couldn’t come

up at least to meet those fellows at 32 cents.’ ’’ ® :

‘LaLime wasn”t the only one that ‘tri€d to persuade Hail

to raise his. prices: ‘‘Now, in the spring, I believe, of 1959

I had a ‘phone call that there was a bread war going on

at the time and a fellow. that represented himself, he said —

he was a Safeway store man, he never gave me any name

on the phone, but he’ said he thought we’d \better get the

price of bread up there. And that was the only thing

that’s ever been said by anybody from the Safeway store.

* * * No, in no way would I know except that he told me

that he was a Safeway store man and that the price should

be brought up there or else we would ieee get in a

bread war with them.’’ ®

This occurred, ‘as neta, in Bellingham, s some 100 niiles

north of Seattle. Two years earlier, in 1957, another such

incident occurred in Yakima, over 200 miles away. Mr..

Wayne Atkinson, owner of a small bakery in Yakima,

testified that he had run an advertisement featuring a price

cut from 31¢ (the price his competitors were then -charg-

ing) to 21¢. The ad ran on a Thursday night, and he sold

_at the low price on Friday and Saturday. On Monday*

morning, he was called on by Jim.and,Bud Snyder, owners |

of a competing bakery. They told him. — had oesiit

a — call from Seattle:

© Tr, 481-482.

© Tr, 478-479.

“a

.

66a

oa Q. Whom did the Snyders say had called them from

Seattle, did they say? |

A. Yes, sir. * * * Safeway.

* . * *

Q. Mr. Atkinson, what happened with regard to your —

prices, what’ did you do about them following this con-

-yersation with the -Snyders? — oe

A. I went’ back to the original price.” /

‘We conclude that,” while “some. of the respondents may |

have thought these repeated price increases we in their .

‘own economic interest,’’ others did not feel that way and

would not have raised their prices had it not been for’ the

——

urgings, and sometimes the threats, of ‘the association’s © ;

‘manager and certain of their competitors. We think it

clear that there was an actual agreement, understanding,

or ‘‘meeting of the minds’’ here between some of the larger, -

more powerful of these respondents, and that the weaker

members acquiesced in the agreement’as & result of the

promptinge and pressures put on them by the former.

eee ls

Respondents argue further that, even if the association’s

manager had in fact suppressed competition among the

Washington bakers, the evidence is insufficient to ‘‘connect”” —

the various individual members of the association with that

70 Tr 381-383. Before he went back, however, ‘‘we had a meet-

ing that was called. I believe it was the following Thursday or

within a few days of when I had been called.’’ The meeting was

held at the Chinook Hotel, in Yakima. The witness attended,

along with ‘‘nearly all bakeries-in the ejty.of Yakima, including

retail and wholesale.’’ Tr. 383. “well/

that were talked about, mostly coordin ing the prices & little bit.

* © * (T]hey all more or less agreed that we would not shoot

[cut] prices on large white and large ‘whole wheat, a pound and

a half loaves, we wouldn’t shoot the prices on those.’”’ Tr. 383,

385-387 (emphasis added).

there were several things .

67a

official’s unlawful acts. “They argue that they hired him

to handle their labor relations with the various labor

unions ; that labor negotiations were ‘‘all he was good for’’;

that he was given no authority to fix prices; that, in fact,

- he was expressly enjoined from doing so; that, if he did

in fact, fix prices, the individual members of the associa-

_ tion neither knew nor should have known of it; and that, .

therefore, they cannot be held responsible for it.

The record, however, is - otherwise. First of all, Mr.

LaLime, the man they eniployed to run their association, .

had a deep personal conviction—a working ‘‘philosophy”’

‘—that was wholly opposed to the national policy in favor

of competition. He was against it, and made no bones

about it. He described his “philosophy” in these words:

A. No. Iam not approached with the price situa-

‘tion. However, I vehemently recommend no price »

_ wars because it is economic waste and very sists

to the industry.

Q. How do you do that? How do you convey that

recommendation? ‘

A; By every persuasion that I am capable ” ae

Q. In the open mesting you use that philosophy, do

you?

A. No, I don't recall of open meeting discussions

.on that basis. No, sir.

Q.. Then how do you convey your philosophy to the

membership?

A. By personal contact,

* Q. What is it you say to them?

A. I tell them that a price war would be very dav. rg

astating to thé industry. The demands that we have

from labor are extremely difficult to livé with without

having a sick industry on top of it.” ~®

_ Respondents contend they knew nothing of Mr. LaLime’s ‘

proselytizing on behalf of his ‘‘philosophy”’ of noncompeti-

-tion. They would have us believe that they were com-

~ pletely unaware of his many phone calls and visits to those

members that cut prices, and those that were slow.to recog-

nize their ‘economic ' interest”? in raising their prices.

- They tell us. they hired him to take care of labor .problems ; ;

if he fixed prices, ' ‘he was strictly on a lark of his own.

We find; as noted above, that prices were discussed at

_ the weekly meetings of the: association:at the Athleétic,Club._ * .

in Seattle, and at meetings held in B llingham and Yakima.

a _ This record establishes that af: least | 4 of the 49 members

of the association*were regularly in attendance at the,

Seattle meetings, inchiding Safeway and the larger whole-

sale respondents in this proceeding, e.g., Continental,

Langendorf, Buchan, and Hansen.” It has.also been shown

by the testimony that the group was small enough, and the

' physical setting was arranged in such a ‘manner, that every ©

person present at those meetings was able to see and. hear

- @verything that was done or said. Mr. LaLime presided.

’ over.these meetings. The smaller members of Ahe associ-

ation did not "understand that labor matters Were ‘‘all he

o

xe was good for.’’ They thought the purpose of the sco

1 Ty 41 (emphasis added). Mr. Lal.ime elaborated upon this

**philosophy.”’ of his in describing the calls he made on members

who attempted to cut prices: “‘‘T did all in my power to persuade

these people: not to.do 6.” Tr. 42. - ‘I asked him’ not to per- .-

petuate a price war, not to become involved in one.’’ Tr? 44. “‘‘I

pointed out that a price war-was very uneconomical, that it would

be disastrous to the industry and it would-be particularly dis-

astrous especially to a smaller operation, that any time these price

wars started there was - one i that ree and that was

complete. chaos. = Tr. 46.

72 CX 7, tr. 81- 94,175. -

*

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tion he represented was ‘“‘to make better labor relations,

to-.matntain prices, and generally better baking condi-

tions.’ They thought the association’s manager was .

the industry’ s ‘‘bellwether’’ on prices.* Théy thought he

was the one to call when a competitor got out of line on

prices.* When he appeared in Bellingham for the stated

purpose of stopping the local price cutting, they thought

‘ .: he was there as a representative of the association; they

‘‘couldnt say that he was up there on his own, no.’’* They

took him seriously when he told them he ‘‘thought maybe

, we might have a bread war if J keep fooling around with

the price of bread.’?’7 When they received a written notice

. that, ona certain date; all the bakers were to raise their

prices, they knew it had to-have come from him. ‘‘[T]hey

[the association officials] would be the only logical ones to

send us out the price. * * * Well, it was from him. It

couldn’t be from anybody else but him.’’** ‘When he.ap-

- peared at a member’s place of business, the member knew

he was there as the. spokesman for the association: ‘‘He

didn’t have to tell me. I know he is.’’ -He was not on

a lark of his own: ‘‘How can he represent himself when he

is working for the association?” ® And he did not repre-

sent merely the wholesale bakers, or. just the retailers:

‘Well, sure he represents the wholesale people and the

retail people.’’ * _ When he told a retail baker to raise his ©

_» - 3 Tp, 464 (emphasis added). Mr, LaLime himself had said this

to the witness, Mr. Robert Hall of Bellingham. Tr. 464.

/4 Tr, 491.

"8 Tr, 258-259.

16 Tr, 480, an CC

7 Tr, 257.

78 Tr, 265. cA

79 Tr, 270. . -

60 Tr, 276. :

$1 Tr. 275.

0a

prices up to the level of his competitors’ prices, the baker |

thought he spoke for the association: ‘‘I thought that was

his job.’’ *2 When he intimated to a small baker that Conti-

nental might be called in to crush him by: selling bread at

his front door for 10¢ a loaf, that baker ‘‘figured he

[LaLime] was speaking for the bakers’ association of

Washington. ’ ro

The association, therefore, and the activities of the man

they jointly put in charge of it, is the cement that binds

the members ‘together here. We find as a fact that each

member of this association either knew or should have

known that LaLime actively discouraged and suppressed

price competition. throughout the area in which it operates,

and that they either affirmatively approved of those activi-

- ties or acquiesced i in them. All knew or should have known

- of the activities of the association and of its manager, and -

all adhered to the fixed prices the manager announced and

_ policed. % Jt is elementary that a conspiracy creates an

agency relationship among its members; every act per-

formed by any member of. the conspiracy in furtherance

of its purposes is, in law, the act of all members of the

‘

al

Tr, 62. | |

Tr, 469-470, #

4 Respondents enjoyed almost iets success in bringing price

cutters into line. An exception was Mr. Vincent Noga, owner of

a small-in-store bakery in a Yakima suburb, who resisted the threats

and sold. beneath his competitors’ prices for over a year (i increasing

_ hig sales volume from approximately 40 to 150 loaves per day, and

his profits from about $9 to $30 per day) ‘until he lost his lease.

_ Ty. 517, 523-525. Bread prices throughout the area are ‘‘quite

_ gtandard.’’ Tr. 185. Asked jf ‘‘the small retail baker’’ stayed at ~

his dwn price level, Buchan, a wholesaler, replied: ‘‘Very much

so.’ Tr.°197. See. ‘also tr. 514.

ARDS RGAE S Ba itch it i PC

Ny te ne 8 ee Oe om ae ee

Lg = 92 pp tient sedi

71la

conspiracy.” Proof of participation in m etings at which.

prices have been ‘‘discussed’’ is. ‘sufficient to provide a

foundation for the introduction of evidence of other acts on -

the part of one conspirator, in furtherance of the con-

spiracy, binding on all. American ‘Tobacco Co. v. United -

States, 147 F.2d 93, 118 (O.A. 6, 1944).” ' Continental

Baking Co: v. United States, 281 F.2d ‘137, 152 (6th Cir.

1960). Here, the principal respondents, ‘including Conti-

nental, Langendorf, and Safeway, all participated in the

Seattle price discussion meetings. ‘Continental’s Seattle’

- .plant manager testified that he not only attended those

meetings generally, but that he had attended them ‘‘around

September of 1960,’’ ** the month in which Continental and

.its major competitors simultaneously raised their prices

from 33¢ to 34¢. Langendorf’s Seattle bread plant man-

ager testified that ‘‘I attended meetings quite often, yes.’? 87

He was. the witness that, when asked why he had elected

to raise his prices on August 11, 1958 (the date on which

his major- competitors raised their prices), rather than a

week earlier or a week later, replied: “I can’t answer that

right ‘now because I can’t think why.’ Jens Hansen,

president of Hansen Baking Company, testified that ‘‘ Well,

I have. always been quite regular [in attending the Seattle

meetings] but I haven’t of late; last year or so I have

been off and on.’’ 8 He was quite regular in 1958; in fact,

% **[W]hen any number of persons associate themselves together

in the prosecution of a common plan or enterprise, lawful or un.

lawful, from the very act of association there arises a kind of

partnership, each member being constituted the agent of all, so

_ thas'the act or declaration of one, in: furtherance of the common

object, is the act of all, and is admissible ag gmmmnary and original

evidence against them.’’ Hitchman Coal Co. v. Mitchell,

245 U.S. 229, 249 (1917). Viera ; ?

86 Tr. 414,

Trp, 315.

8 Tr. 322.

_ 9% Tr, 294,

72a

c

_ of the 26 or more meetings held by the association in that

year, ‘‘I attended a good proportion of them.’’ ® George

Buchan, president of Buchan Baking Company, testified

that he regularly attended the association’s Seattle meet-._

ings, ‘and that:he ‘‘imagined’’ prices were “‘discussed.’’

Other witnesses testified.to seeing representatives of these

and other companies at the Seattle meetings.2.

Tr, 304,

“1 Tr, 189-190.

” 8 See, e.g., testimony: of Harry Schafer, of Schafer’s Bakery,

who, saw Jim Hansen, George Buchan, Mr. Richards (of Con-

' tinental) and Al Moore (of Langendorf) gr the meetings, tr. 496,

together with numerous other wholesale*and retail bakers. (The

number attending varied. from perhaps 10 to 25. Tr. 493,'495.)

The association’s manager, LaLime, submitted'a list (CX 7) of

the ‘‘regulars’’ who had left standing instructions that they ‘be

notified of all meetings (tr. 87, 94,175). There are fourteen of

these regulars, including Continental, Langendorf, Buchan (rep- .

resented by respondent George B. Buchan), and Hansen (repre-

sented by respondent Dick Hoyt).

The association’s manager also testified to the attendance at the

| meetings of representatives of Safeway, Continental, Langendorf, :

Hansen (represented by its président, Jens Hansen, or Richard '

Hoyt, who is also vice president of the association) (tr. 81, 176),

and Buchan (president of the association) (tr. 81). Witness Wayne

-Atkinson, former owner of the Old Holland Bakery in ‘Yakima,

identified Jim and Bud Snyder, owners of respondent Snyder’s

Bakery, in Yakima, as competitors who had pressured him to raise

his prices (tr. 379). He also testified to a meeting at the Chinook

Hotel, in Yakima, attended ‘‘by nearly -all bakeries in the city of

Yakima, including retail and wholesale’’ (tr. 383), at. which ‘they

‘ all more or less agreed that he would. not shoot [cut] prices on

large white and large whole wheat.* * *.’’ Tr. 386. The witiess _

specifically noted the presence at that meeting of the Snyders,

~ Dick Trenerry (of respondent Trenerry’s Bakery, a wholly-owned

. subsidiary of respondent Holsum Baking Co.), and Jack Larson

(tr. 384). Respondent Victor H: Goethals, proprietor of Fortune’s

Bakery in ‘Anacortes (near Bellingham), testified to following,

although apparently ‘‘unwillingly,”” Federal Trade Commission v.

_ Cement Institute, 333 U.S. 683,'719 (1948), the association’s in-

_ structions to raise prices (tr. 50-62). . ,

. £ 4

. °”

o

Ta

And of course Safeway was represented at those meet-

ings. Safeway was not ‘a ‘‘member’’ of the association.

It was not carried on the rolls and did: not pay dues. But

‘it nonetheless managed to secure all the benefits of member-

ship by ‘‘retaining,’’ on an annual ‘‘fee”’ basis, the associ-

ation’s manager to handle its labor negotiations. Safeway 7

paid LaLime, as it had his predecessor, Alford, a ‘‘re-

tainer’’ of $600 per year.* In addition, however, Safe- |

way’s representatives. attended the Seattle. meetings at

the Athletic Club: Canc

Q. Does a representative of the Safeway organiza-

tion attend meetings of the’ Bakers ‘of Washington,

Ine? * av | |

A. Their labor relations man would on occasion de:

. .

ing contract negotiations.

Q. What about their divisional bread man?

A. He would attend meetings. € | |

Q. He does regularly attend meetings?

A. Usually, not always. |

‘As noted, Safeway has its own baking plant in Seattle,

, producing its ‘ private brand’? bread called. ‘Mrs.

Wright.’’ It sells this bread in its various retail stores

located, apparently, ‘‘all over the State of Washington.’? .

In addition, Safeway’s retail stores handle the. ‘“‘name

brand’’ breads produced by the wholesale bakers. It thus\.

| has two prices:: first, the full, ‘“‘suggested’’ retail price

for the wholesalers’ bread (e.g., 34¢ for “Wonder”? bread) ;

and, second, 1¢ less (33¢) for its own self-baked brand,

'. “Mrs. Wright.”

% Tr, 32. : ee

* Tr, 80 (emphasis added). See also tr. 81-82.

5 TP, 262. ee

* ‘ se T4a

In fact, Safeway is the local bread industry’s club over

the smaller bakers. Witness Wayne Atkinson, proprietor

of a small bakery in Yakima, testified that when he cut his _ a

price, ‘a local competitor, a Mr. Snyder, immediately

- showed up at his place of business’ to tell him Safeway

~had called about his price:

. Q. Whom did the Snyders say had called them from

Seattle, did they say? =i as wae eines

A. Yes, sir. |

Q. And who was it?

A. Safeway.**

Another price cutter testified that he had personally re-

ceived a threatening phone call from Safeway: ‘‘Now, in

the spring, I believe, of 1959 I had a phone call that there

was a bread war going on at the time ‘and a fellow that

represented himself, he said he was a Safeway store man,

he never gave me any name on the phone, but he said he

thought we’d better get the price of bread up there. “And

that was the only thing that’s ever been said by anybody

from the Safeway store. * * * No, in no way would I

_ know except that he told me that he was a Safeway store

man and that the price should be brought up there or else

_ we would probably get in a bread war with them.’? *

-

_.. As to the remaining respondents, it is ttue of course

that ‘‘mere membership’? in the association is not enough

to warrant.an order against them. Phelps Dodge Refining

Corp. v. Federal Trade: Commission, 139 F.2d 398, 396

(2d Cir. 1943). Here, however, many of these respondents’

were shown to have either attended meetings where prices

were discussed, either in Seattle or in one of the divisions,

or to have actively attempted to influence the prices of

competitors. And they generally adhered to the prices

% Tr, 381-382A.

', 7 Tr, 478-479 (emphasis added). _ +

_ 8 See n. 92, supra. ,

75a cS) \

fixed at those meetings. But certajnly all of them knew

or should have known of the price fixing. activities of the

associatién’s manager, LaLime. He was outspoken in his |

hostility to price competition, openly spreading his ‘‘phi-

losophy”’’ to the members by ‘‘personal contact.’? (Each

of the ‘‘divisions”’ was visited by LaLime.from 10 to =.

times per year.) His threats, and those of Safeway and

the other powerful. bakers, could hardly have failed'to come

to the attention of these respondents, and thus to have put

them on notice of the fact that the association was engaged

in unlawful pricing activities."

Iv.

‘ : 2 ‘

Finally, respondents contend that the order entered by

' the ‘hearing examiner is improperly broad—that it should

be limited to the precise geographical area in which the

price fixing has been found (State of Washington), rather

than extending to wherever each of the respondents do busi-

ness; and that, in enjoining them from continuing to fix

prices in the future, it should not prohibit them from fixing

prices generally, but only from achieving that result’ by

the precise means involved here, i.e., through this particular -

trade association, Bakers of Washington, Inc. :

The latter contention borders on the frivolous. While

_ the Commission must tailor its orders to the particular

% See n. 84, supra.

1 Tr, 39. et

, “Thus the issue is reduced to whether a member who knows

or should know that his association is engaged in an unlawful |

enterprise and continues his membership without protest may be

charged with complicity as a confederate. We believe he may.

Granted that his mere membership does not authorize unlawful

conduct by the association, once he is chargeable with knowledge

that his fellows are acting unlawfully his failure to dissociate

himself from them is a ratification of what they are doing. He

becomes one of the principals in the enterprise and cannot dis-

claim joint responsibility: for the illegal uses to which the associa-

tion ig put.’’ Phelps Dodge, supra, 139 F. 2d at 396-397.

s

ing for an order that merely prohibits price fixin

oii has Cok, ches -

-

ee en. ae ee ee, ae ee ne ee

760

‘‘practice’’? found to have. existed, ‘‘price. fixingy is a

single, well-defined ‘‘practice.’? Respondents, i tend-

rough

the instrumentality of Bakers. of Washington, Inc., mis-

concéives the distinction between a generic ‘‘practice’”’ and

the several techniques of effecting it. For example, an

order so limited would leave these respondents free to

resume their conspiracy tomorrow, holding conspiratorial

meetings at high noon in the most public place in the city

of Seattle, so long as they kept the association, Bakers of .

- Washington, out of the matter. Such an ‘order would be

_ no more effective than one limited to a prohibition of price

fixing only. where it was accomplished by meetings held at

a particular place, e.g., at the Athletic Club in’ Seattle.

~The order could -be avoided by using the telephone instead | :

of having a meeting, or by moving‘the site of the meeting.

from-the Athletic Club to other premises. In Cement

Institute v. Federal Trade Commission, 333 U.S. 683 (1948),

the respondents objected to the fact. that the order not

only prohibited price fixing by means of the. ‘‘basing-point

system,’’ but also by selling ‘‘pursuant to or in accordance

with any other plan or system which results in identical

price quotations or prices for cement *.* *.? The Court

said: ‘‘The paragraph is merely designed. to forbid re-—

spondents from acting in harmony to bring about national

uniformity in whatever fashion they may seek by collective

_action to achieve that result. We think that no one would

find ambiguity in this language who concluded in good

faith to abandon the old practices.’? (333 U.S. at 729.

Respondents’ suggested ‘‘territorial’’ limitation of the

order is equally unsound. The general rule is that a viola-

tion of law, whether practiced in one area or in many,

warrants an order covering the whole of the violator’s

business. There being no reason to suppose that an entity ©

_ Showing no reluctance to-fix prices in Seattle, Washington,

would act differently in another city or another state, the

-. public interest in the cessation of such unlawful conduct

4 CRA RG AE GES IEA REA RA ATER ENG tn GAO ee AE

77a

~

, Tequires an order that protects the public in all of the

states, not merely in Washington.’ 3

Finally, respondents profess the fear that the order, as

drafted, might be so construed as to prohibit such lawful

_ business practices as marking their loaves of bread at the

baking plant with suggested retail prices, especially since. .

they make ‘‘accommodation’’ sales to each other. The

language that bothers them here is that’ part of the pre-

amble that prohibits conspiracies and collusive understand-

ings between. any two or more members of the association

‘tor between any ene or more of them and others not par-

ties hereto,’’ to fix prices, adhere to such fixed prices, or

deter any competitor from exercising his own independent

judgment in pricing his goods. The prohibition of future

' price fixing conspiracies between one or more of the re- .

‘spondents ‘‘and others not parties hereto”? is a routine

provision, one that has been expressly sanctioned by the

_Supreme Court. For example, in-Cement Institute v.

. Federal Trade Commission, ‘supra, the order approved by

the Court prohibited future. conghirgcien not only between

the parties themselves but ‘‘between any one or more of

. said respondents and others not»parties hereto * * *.’?. The:

’ Court, noting that the conspirators had secured the aid of

others in the past, and that the entry of new members in

the industry in the future could be reasonably anticipated,

'..declared that ‘‘the Commission was authorized to make its

order broad enough effectively to restrain respondents |

from combining with others as well as among themselves.”’

Id., at 728-729. . - ; .

102 “As to territorial extent, the company, having been found

guilty of a flagrant violation of the act, was properly required .

to cease and desist from such practices in all areas in which. it

was doing business.’’ Maryland Baking Co. v. Federal Trade Com-

_ mission, 243 F. 2d'716, 718 (1957). See also Foremost Dairies, Inc.,

_ Dkt. 7475 (1963), holding that an order was properly extended tc

the respondent’s operations throughout the country, rather than

being limited to Albuquerque, New Mexico, the city where the

violation was found to have occurred. ;

78a

~The instant order, which is substantially the same as

‘the order approved in Cement Institute, supra, could not -

conceivably be construed to prohibit the co n practice ,

of placing “‘suggested”’ retail prices on b wrappers. aR

The line between the “‘suggesting”’ of prices psadh the ‘‘fix- .

\. ing’’ of prices is so well settled as to require'no discussion.

_ Respondents are simply being required to leave their com-

| petitors alone—to stop agreeing with them, and stop inter-

fering with them—in the pricing of bread. Selling them

bread that happens to bear a suggested retail price consti-

tutes neither agreement nor, interference. As the Court

said in Federal Trade Commission. v. National Lead Co.,

352 U.S.-419, 431 (1957) : ‘‘Respondents pose hypothetical

situations which they say may rise up to plague them. ~

However, ‘we think it would not be good judicial admin-

istration’ * * * to strike the contested paragraph of the

order to meet such. conjecturés. The Commission has re-

served jurisdiction. to meet just such contingencies. As

actual situations arise. they can be presented to the Com-

_ mission in evidentiary form rather than as. fantasies. ’’

Moreover, under the Commission’s present rules of prac-

tice, provision is expressly made for those bound by an

order to secure advice fromthe Commission as to whether.

a proposed course of action would be in compliance there-—

with. / Rules Sec: 3.26(b), (c), 28 Fed. Reg. 7080,.7091 -

(July 11, 1963). See also Regina Corp. v. Federal Trade

; .Commission, 322 F.2d 765 (3d Cir. 1963); Vanity Fair

Paper Mills, Inc._v. Federal Trade Commission, 311 F.2d

480, 488 (2d Cir: 1962). be

We think the order should be modified in one particular, —

however. As-issued by the examiner, it prohibits any two

' of these respondents, or any one of them and any other

person, from collusively engaging in the described price

fixing activities, without regard to whether any ‘of those ~

activities occur in interstate commerce. This Commission

is without jurisdiction to, issue an order prohibiting two

Seattle bakers, neither of which does business of any kind

1h

| Wa

outside the city, from conspiring solely with each other ‘to’

fix local prices. Accordingly, the order will be modified to

prohibit future collusion on prices ‘‘(where any one or

more of the parties to’ that. planned common course of ac-

tion, understanding, agreement, combination or conspiracy

is selling bread in interstate commerce in competition with

bread sold by any one or more of the other parties

thereto.) ’’ .

Respondents’ exceptions are denied. The initial decision

and order as supplemented and modified to conform to the

findings and views contained in this opinion will be adopted.

as the decision of the Commission.

Commissioner Anderson concurred in the results; Com-

missioner Elman dissented and has filed a dissenting

‘opinion; and Commissioner Reilly did not participate for

the reason that he did not hear oral argument. .

February 28, 1964 _.

CoMMISSIONER, Eiman, dissenting:

I do ‘not concur for the following reasons: The Commis-

' sion’s assertion of jurisdiction seems to me to be, at least, -

highly questionable.’ On the merits, the finding of an:

* illegal price-fixing conspiracy is not supported by the .

record. And, even assuming such a conspiracy has been

proved, the order is ‘not responsive to the needs of the

situation. is,

I.

In F.7-C.¥. Bunte Bros. Co., 312 U.S. 349, the Supreme

Court held that local practices are not, withi the Commis-

* sion’s- jurisdiction’ under the pain Trade Commission

Act where they have a merely remote ot indirect relation-

ship to interstate commerce ; they must be ‘‘in’’ commerce..

Clearly, the Commission has jurisdiction over a: price-

fixing conspiracy if there are sales in commerce, or if the

conspiracy extends across state lines, or if any of the |

. >

° ; ¢ ’

Bes Paceline eit ipo vin anid Sse Das Ca SMG sic weit Ns setting

~ ° > a

: means, or instrumentalities by which the conspiracy is

_ formed or carried out is in’ commerce. ‘Moreover, the Com-

. hission would have juri diction, I believe, even over an

_essentially local price-fixing conspiracy, if one of the par- :

‘ ticipants was ‘engaged elsewhere in ‘interstate. commerce —

and ‘used. ‘power or resources, derived from its interstate .

. activities, in furtherance of ‘the conspiracy, for example -

Je by bringing pressure on local. competitors or customers to-

ee join or continue in the conspiracy. Cf. Moore’ v. Mead’s °

ruse: - . | Fine Bread Co., 348 U.S. 115; Borden -Co., FT.C. Docket °

RRA EEL PRES Re el aS

—

Jo ee Oe a eae ie re

Sy

7474 (decided Feb. 4; 1964), pp. 2-4 (dissenting opinion). — -

Ra eae “Batt so far as appears from the record, none of these con-

re | ditions obtains in the present case. No interstate sales

/...’ were involved-in the alleged conspiracy*; the -markets’

er _ ‘involved were, all within a ‘single state; none of the other

et \ acts involved i in the. alleged conspiracy was in- commerce ;

| and interstate commerce ‘was not used as.a weapon, for -

suppressing ‘intrastate. commerce.

oe

ON ae not believe that the. Commission, under the Federal

| : >, a ‘Trade Commission, Act, has jurisdiction over interstate

a “companies as such. (compare, e.g., Section 7 of the Clayton

’ Act, as ‘amended ; Foremost Dairies, Inc., F.T.C. Docket

: . 6495 (decided April. 30, 1962), pp. 36-37), ‘which seems to

be ‘the upshot of the Cominission’ s jurisdictional holding. ©

“Certainly United States v. ,South-Eastern Underwriters — |

Assn.; 322 U.S. 533, on which the Commission chiefly re- -

‘lies, stands for no such proposition. ‘The ‘Supreme Court’s’

detailed, tracing in that case of the interstate ramifications

_of the typical. large insurance company was directed to

showing that the insurance business is a commercial. ac- .

- tivity like ny other, and that the localized act: of con-

_ association made sales in Alaska, I find no ‘indication that these

sales were: part of the alleged price-fixing conspiracy. The vast

. * majority of the association members, who did no business in Alaska, |

- had ho interest in, fixing prices there.- And the- theory on which |

this case was tried is that there was a corspiracy to fix prices in

a the er. not the Alaska, market, ; ¢

oe. Rare ™*

- . a! 4 - .

,

:

:

|

CS : , 5 7 pus a the evidence that some. useihen of the cients inte

|

hin

8la

‘trneting for ‘i ‘insurance. is just one oispuet: of the business ;

. such an analysis was required because of earlier Supreme

Court decisions which: had held that tlie insurance business

_ was basitally not commerce at hill. Since the indictment in

South-Eastern Underwriters charged nothing less than a

‘single combination to fix the price terms upon ‘which in-

surance business was conducted throughout a six-state

"area, the decision can hardly be said to have established

_ that any restrictive practice by an integrated multi-state

_.” enterprise, however localized in its scope and character, i is

within the reach of the federal antitrust laws, and in par-

jHeular of Section, 5. ; oe

.; oe 3 .

Direst: evidence is rarely available to prove a conspiracy |

or secfet agreement to fix prices. . To establish the requi-

site meeting of minds, it may often be necessary to rely

exclusively on circumstantial evidence. Considered indi-

vidually, the circumgtances may be equally consistent with

an inference .of innocence as with one of guilt; the pattern

ma

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