# Appendix — United States v. Von's Grocery Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0265%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1966 - **Citation:** 384 U.S. 270 ## Text —— SUPREME COURT OF THE UNITED STATES Octoser TreRM, 1965 No. 303 UNITED STATES, APPELLANT, vs. VON’S GROCERY COMPANY, ET AL. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CALIFORNIA Volume I INDEX Original Print Record from the United States District Court, Southern District of California, Central Division.............. 1 Ne sre Se aes Cees 0s peaks > 1 Answer to complaint (excerpt) 6 Order allowing defendant leave to file an amended answer ..... aaa ee Mis catiecdie, iar, Sie yi oa ASF 6 Amended answer to complaint..................... 8 Pre-trial conference order, dated April 24, 1961, as amended, June 17, 1963........................ 12 Notice that trial date postponed from August 1, 1961 to October 31, 1961 on the Court’s own motion, ge SR Ea ee 25 Minute entry of Order that trial date is continued from October 31, 1961 until November 14, 1961, dated September 21, 1961...................... 26 Minute entry of Order that trial date of November 14, 1961 is vacated and case set for pretrial hearing December 18, 1961, dated November 14, 1961. _... 26 Minute entry of Order that trial date is set for June 11, 1963, dated February 19, 1963............... Transcript of proceedings, June 11, 12, 13 and 14, 1963 1 pS RCS ee ae 2 Colloquy between court and counsel............ 4 Plaintiff's Exhibit No. 72 read into reeord—Stipu- lation filed May 7, 1963 23 BS BRBS — EP AT Se BIEL fee | ae GL EEL CLG ELI EIEIO IDET OP CGE LESS a a RELI EMOTE OS li INDEX Record from the United States District Court, Southern District of California, Central Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Original Print Testimony of Lloyd E; Allen by narrative stateniéht........ per erat 24 40 Testimony of Solomon Barondess by narrative statement........--.-----5-> 30 43 by deposition—direct (by Mr. Alsup).....-- 36 47 —cross (by Mr. Hughes)...... 72 69 —redirect (by Mr. Alsup)..... 75 71 —recross (by Mr. Hughes)... 76 71 —redirect (by Mr. Alsup). ... 76 71 Testimony of Adrian Bynum by narrative statement........-..----- 77a 72 Testimony of Artie L. Carpenter by narrative statement..........-.----- ane 78 76 by deposition—direct (by Mr. ee 84 80 —cross (by Mr. Hughes)... .. 158 124 —redirect (by Mr. Alsup)..... 167 130 Testimony of Kasper Chitjean by narrative statement..........-.. ee Ber 180 137 by deposition—direct (by Mr. Alem)... .--- 186 141 —cross (by Mr. Hughes).....- 224 164 —redirect (by Mr. Alsup).... 232 169 —recross (by Mr. Hughes)... . 237 172 Testimony of Kenneth Craun by narrative statement........-.-..--- ++) 239 173 | by deposition—direct (by Mr. Vaughn).... 245 177 —eross (by Mr. Coyle)....... 291 205 | —redirect (by Mr. Vaughn)... 293 206 | —recross (by Mr. Coyle)...... 309 216 —redirect (by Mr. Vaughn)... 310 217 —reeross (by Mr. Coyle)... .. 312 218 Testimony of Richard Dick by narrative statement. ....------6 0 314 219 by deposition—direct (by Mr. Abe)... ..+-- 320 222 —cross (by Mr. Hughes)... .. 380 258 —redirect (by Mr. Alsup)... 385 261 —recross (by Mr. Hughes)... 388 263 Testimony of Lester L. Eaton by narrative statement........------- +--+) 390 264 by deposition—direet (by Mr. Vaughn)..... 397 268 —eross (by Mr. Coyle)..... _ 487 292 —redirect (by Mr. Vaughn)... 440 294 —reecross (by Mr. Coyle)...... 442 295 —redirect (by Mr. Vaughn)... 443 295 —recross (by Mr. Coyle)...... 444 296 —redirect (by Mr. Vaugha)... 444 296 — INDEX ili Record from the United States District Court, Southern District of California, Central Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Original = Print Testimony of Don Henry Fairbank by narrative statement.................... 446 298 by deposition—direct (by Mr. Alsup)....... 453 302 —cross (by Mr. Coyle)..... . §18 341 —redirect (by Mr. Alsup).... 544 357 —recross (by Mr. Coyle)...... 559 366 —redirect (by Mr. Alsup)..... 559 367 Fairbank Exhibit No. 1—Graph showing “Percentage of Total Grocery Store Sales by Various Groups of Chains in the Los Angeles Metropolitan Area 1950-1960”.... 560a 369 Testimony of Jerry Fleishman by narrative statement.................... 561 371 by deposition—direct (by Mr. Alsup)..... . 569 375 —cross (by Mr. Hughes)...... 629 411 —redirect (by Mr. Alsup)..... 636 415 Fleishman Exhibit No. 3—Hand printed sign “Under New Management, ete.”.......... 637a 417 Testimony of Manuel Gertmenian by narrative statement .. ................ 638 419 by deposition—direct (by Mr. Alsup)....... 644 423 —cross (by Mr. Hughes)...... 708 461 —redirect (by Mr. Alsup)..... 717 466 Testimony of Edward Hasson by narrative statement .................... 724 470 Testimony of Thomas P. Hubbard by narrative statement .............. 730 474 Testimony of Roderick A. Irvine by narrative statement. --s- 400 477 by deposition—direct (by Mr. ‘Alsup) .. te 743 481 —cross (by Mr. Hughes) ..... 797 514 —redirect (by Mr. Alsup)..... 803 517 —recross (by Mr. Hughes).... 812 523 Testimony of eo Arthur Jenkins by narrative statement ee 525 by deposition—direct (by Mr. Bates) . ee 820 529 —cross (by Mr. Hughes)...... 884 567 —redirect (by Mr. Alsup)..... 893 573 —recross (by Mr. Hughes).... 895 575 Testimony of James E. Ledgerwood by narrative statement —.......... 897 575 Testimony of Jack Levitan by narrative statement ......... .. 904 579 Testimony of Robert J. Logue by narrative statement Fath, Ce TA 583 i TE RH PR RY PRES ORE ERT FB iv INDEX Record from the United States District Court, Southern Distriet of California, Central Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Testimony of Morris Maltz by narrative statement Testimony of George Matsumura by narrative statement . Testimony of Spencer L, McKernan by narrative statement. Volume II by deposition—direet (by Mr. Vaughn) —eross (by Mr. Knight) —redirect (by Mr. Vaughn) —reeross (by Mr. Knight) —ryedireect (by Mr. Vaughn) —recross (by Mr. Knight) —redirect (by Mr. Vaughn) Testimony of Ernest A. Mekjian by narrative statement. by deposition—direct (by Mr. Bates) —ceross (by Mr. Coyle) —redireet (by Mr. Vaughn) —reeross (by Mr. Coyle) Testimony of Jean H. Muntifering by narrative statement Testimony of Paul Palmer by narrative statement _. A by deposition—direct (by Mr. Alsup) —eross (by Mr. Hughes) —redirect (by Mr. Alsup) Testimony of Kenneth Richey by narrative statement . = by deposition—direct (by Mr. Bates) ——eross (by Mr. Hughes) —redirect (by Mr. Alsup) . —reeross (by Mr. Hughes) Testimony of Charles I. Rubin by narrative statement by deposition—direct (by Mr. Vaughn) —eross (by Mr. Knight) —redirect (by Mr. Vaughn) Testimony of Frank Rush by narrative statement Testimony of Jack Swerdlick by narrative statement hig by deposition—direct (by Mr. Vaughn) —eross (by Mr. Hughes) NT ee ey Original Print 916 922 586 ie Q » Aw pe. “” Srna. INDEX Record from the United States District Court, Southern District of California, Central Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Testimony of John Taylor by narrative statement by deposition—direct (by Mr. Bates) ~eross (by Mr. Knight) —redirect (by Mr. Vaughn) —reeross (by Mr. Knight) —redirect (by Mr. Vaughn) —recross (by Mr. Knight) Testimony of Morris Wallen by narrative statement Testimony of Gerald D. Harrison by affidavit Testimony of Harrison F. Houghton by affidavit Plaintiff's Exhibit No. 87—Appendix—Spe- cial Tabulation by Department of Com- merce on Multiunit Grocery Companies in the Los Angeles-Long Beach, California, Standard Metropolitan Statistical Area, compiled from returns made in the 1948, 1954 and 1958 Censuses of Business with certificate... Testimony of Thomas H. Linden, Sr. by affidavit .._.. ¥ Testimony of Willard F. Mueller. by affidavit _.. Testimony of Joseph T. De Silva by affidavit Plaintiff's Exhibit No. 91—Map of Los An- geles County showing jurisdiction of Local ree Pee ne Testimony of John B. Marshall by affidavit : by deposition—direct (by Mr. Vaughn) —¢tross (by Mr. Coyle). . —redirect (by Mr. Vaughn) —reeross (by Mr. Coyle) . Opening statement on behalf of plaintiff by Mr. Coyle ....... Opening statement on behalf of defendants sty ‘Mr, Alsup Colloquy between court and counsel. Testimony of Kenneth Craun —direct (by Mr. Coyle) —cross (by Mr. Alsup).... —redirect (by Mr. Coyle) —recross (by Mr. Alsup) Original 1331 1337 1380 1394 1419 1419 1421 1423 1434 1436 ag WAS OAS AOD AGT BN TERI LTE DY BOSE. ELEN INGLES OIG BOLE, DY LEER CAE NS BOE Prim 835 839 865 873 888 888 890 902 903 905 907 913 916 990 998 1000 1002 1044 1095 1111 1120 1129 1131 INDEX @ vi ~ Record from the United States District Court, Southern ia District of California, Central Division—Continued 4 Transeript of proceedings, June 11, 12, 13 and 14, . % 1963— Continued 0 Print “4 Testimony of Richard Dick 4 —direet (by Mr. Coyle) 1818 1132 ‘ —eross (by Mr. Alsup) 1828 1138 3 redirect (by Mr. Coyle) 1s40 «144 ‘ Colloquy between court and counsel 1840 1145 ® ot : Votume HI 4 Testimony of Theodore A. Von Der Ahe ; —direet (by Mr. Alsup) 1941 1199 ¢ —eross (by Mr. Coyle) 2046 1258 % —redireet (by Mr. Alsup) 2137 1312 rs Colloquy between court and counsel 2148 1319 4 Testimony of Theodore A. Von Der Ahe Ed —redireet (resumed) (by Mr, Alsup) 2162 1325 —-reeross (by Mr. Coyle) 2192 13438 Defendants’ Exhibits BI —Affidavit of W. D. Hayden sworn to January 23, 1963 with List showing Discount Houses with Food Depart- ments, dated October 19, 1962 21992 = 1348 —Deposition of William Delbert Hayden taken May 21, 1963 2199-1 1355 —direet (by Mr. Coyle) 2199-3 1355 —eross (by Mr. Alsup) 2199-40 1379 —redirect (by Mr. Coyle) 2199-44 1381 —reeross (by Mr. Alsup)... 2199-45 1382 —redireet (by Mr. Coyle) 2199-46 1383 Affidavit of W. D. Hayden sworn to June 10, 1963. 2199-48 1385 AX —-Affidavits of Defendant's Industry Witnesses Who Operate One Grocery Store 1387 —W, H. Crawford sworn to December 24, 1962 1387 _J. R. Dahl sworn to November 6, 1962 —_Ceeil W. Dobson sworn to February 8, 1963 1390 —Reynold Elkin sworn to January 11, 1963 1396 —Joseph Goldberg sworn to February 20, 1963 1402 INDEX Record from the United States District Court, Southern District of California, Central Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Defendants’ Exhibits— Continued AZ —Albert Goldstein sworn to February / Se eae ; —Harlos Gross sworn to October 25, 1962 ~—Paul A. Hines, Jr. sworn to January 10, 1963 —John H. Irwin sworn to November 9, 1962 —O. W. Richard sworn to February 14, 1963 ——Mrs. Leila M. Roberts sworn to Feb- ruary 19, 1963 —Robert Sherry sworn to December 19, 1962 . . -—Affidavits of Defendant's Industry Witnesses Who Operate from Two to Nine Grocery Stores ~—Eugene Gelson sworn to January 8, 1963 —Nathan Gilbert sworn to February 18, 1963 —Mareus L. Godfrey, Jr. sworn to Jan- uary 22, 1963 — Joe B. Goodnight sworn to October 26, 1962 ~-Yoshi Tnadomi sworn to January 11, 1963 ’ —Arthur C. Jones, Jr. sworn to January 19, 1963 A. J. Miller sworn to Febzuary 19, 1963 -—-O. J. Schoen sworn to January 11, 1963 —Daniel H. Wilson sworn to January 11, 1963 —Affidavits of Defendant's Industry Witnesses Who Operate Ten or More Grocery Stores —Sam Alexander sworn to October 26, 1962 . ines —Claude W. Edwards sworn to January 1l, 1963 Pete —Charles J. Futterman sworn to October 26, 1962 ey —George F. Fitzpatrick (not dated) —Joseph P. Hughes sworn to January 24, 1963 vii ieee a —— ES TS Sc ERISA pO LISS EOI LE ORD ES INDEX Record from the United States District Court, Southern District of California, Centrai Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Defendants’ Exhibits—Continued BA —Roger Laverty, Sr. sworn to January i” SP —Richard Ralphs sworn to February 18, Ne ty pig ev dv veh Rene Har eae © on —Neal D. Ramsey sworn to October 19, EO a Feb x avine dee —Ted R. Wood sworn to October 25, WN 5 ind Ma REECE —Affidavits of Von’s Officers.......... —Charles Von Der Ahe sworn to January i eres Pee eee eee —W. R. Hayden sworn to February 19, | Re ere PT er eee —Theodore A. Von Der Ahe sworn to February 26, 1963..............--.. Exhibit A—Table B—Analysis of the Gross Sales of Grocery Stores with Estimated Annual Sales of Less than $500,000 that Opened in 1960 and Closed by November 15, 1961, the Los Angeles Metropoli- tan Area, Dated April 6, 1962... —Deposition of Theodore A. Von Der Ahe taken May 23, 1963 —direet (by Mr. Coyle)... ~-eross (by Mr. Alsup)..... —redirect (by Mr. Coyle). —recross (by Mr. Alsup).... —redirect (by Mr. Coyle)... —reeross (by Mr. Alsup)... —redirect (by Mr. Coyle). . —reeross (by Mr. Alsup). —redirect (by Mr. Coyle) Von Der Ahe Exhibits No. 1—Artiele from the January 12, 1962 Commercial Bulletin No. 2—Article from the Food Mart News for February 17, 1961....... No. 3—Clipping from the Southern California Grocers Journal for Au- gust 25, 1961 and Clipping from the Commercial Bulletin for August | epee sere ee No. 4—Clipping from the Commer- cial Bulletin for October 6, 1961... EESTI ELIE TOE amc Original 59 61 Print 1487 1491 1492 1495 1500 1500 1506 1515 1547 1548 1565 1571 1574 1574 1577 1579 1581 1582 1585 1586 1587 1588 — INDEX ix Record from the United States District Court, Southern District of California, Central Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Defendants’ Exhibits—Continued Original Print Von Der Ahe Exhibits—Continued No. 5—Article from Food Merchan- dising for April 1962 entitled “Price Reduction Only Stopgap Measure” 62 1589 No. 6—Article from the Commercial Bulletin for February 16, 1962 _.. 63 1590 No. 7—Clipping from the Commer- cial Bulletin for March 29, 1963 en- titled “Southern California Discount Centers” (Volume General Stores with Food Departments)... ___. 64 1591 BB —Affidavits of Defendants’ Other Indus- Oe WR ee 1593 —dJohn Coker sworn to February 13, BT otek tess va ss. 1593 —Charles Chamberlain sworn to Febru- SR aaa 1596 —Cyril C. Nigg sworn to February 11, , SEE Ae eens eae 1602 —Edward F. Pasini sworn to December S.A Seite 4a ee 1604 —Campbell Stewart sworn to December Ae ae nia i are 1641 —Thomas H. Linden, Sr. sworn to Feb- on ee. Ser Desor 1646 —M. W. Engleman sworn to February WL ESS cigs ok pe een at 1649 —Clive W. Johnson sworn to January Ra re eS 1651 —Howard Kruger sworn to October 31, a ET OIE SE RTS 1653 —Franklin L. Miller sworn to October Me ES eRe LL, 1654 BC —Affidavit of William Dover sworn to February 21, 1963.................. 1660 BD —Affidavit of Dorothy D. Corey sworn to October 22, 1962................ 1662 Attachment—Los Angeles Times “Con- tinuing Home Audit—Grocery Pur- EE ks he cate re. 1671 —Deposition of Dorothy D. Corey taken May 22, 1963 and May 24, 1963 —direct (by Mr. Coyle)... _. 3 1673 —cross (Mr. Vaughn)... 67 1714 —redireet (by Mr. Coyle). .__. 74 1718 x INDEX Record from the United States District Court, Southern District of California, Central Division—Continued Transcript of proceedings, June 11, 12, 13 and 14, 1963—Continued Defendants’ Exhibits—Continued Cory Exhibits No. 1—Document entitled “Monthly News Letter Prepared for Western Advertising by Facts Consolidated” BE —Affidavit of Victor Hinson sworn to October 22, 1962........------- 5-5) BF —Affidavit of Roy L. Bouque sworn to April 17, 1963 with Appendices I MON Be ne nea baer karen ee eet eet? Volume IV —Deposition of Roy Lawrence Bouque taken May 28, 1963 and June 4, 1963 —direct (by Mr. Coyle).....-. —eross (by Mr. Vaughn)... . —redirect (by Mr. Coyle)... .-. Bouque Exhibit No. 1—Table show- ing “Total Grocery Store Sales and Food Store Sales for each of the years 1950 through 1960 in the Los Angeles Metropolitan pO eee BH —Affidavit of Godfrey M. Lebhar sworn to October 11, 1962..........------- —Deposition of Godfrey M. Lebhar taken May 16, 1963...........-------+ ++: —direet (by Mr. Coyle)....... —eross (by Mr. Vaughn)... —redirect (by Mr. Coyle)... .. —recross (by Mr. Vaughn)... . Transcript of proceedings, June ie Se Defendants rest..........0.:.cee reece’ Defendants’ Exhibit BB —Affidavit of Roy King sworn to Octo- "ee renee —Deposition of Roy King taken on May GO, MOOD. oe oo cn ce sin peeves s+ ' > —direct (by Mr. Hughes)..... —eross (by Mr. Alsup)....-.- —redirect (by Mr. Hughes)... —recross (by Mr. Alsup)..... Original 132 1806 1889 1892 1894 1895 1902 1937 1938 1944 1946 1946 1947 1952 1969 1977 1978 j ees rd Lied aan a sins Tae SE aa ee et al . NAWETERT SESE FAM Mi GES ES SSPE IN IIIS PRIN RI TARY lg NE OR ONIN eR . 5 TSP OS EOP EIS EN OMIT NG SIRE ESTE MENS Ey, CREDIT CAAT Se ss INDEX Record from the United States District Court, Southern District of California, Central Division—Continued Transcript of proceedings, June 14, 1963—Continued Defendants’ Exhibits—Continued Original King Exhibits No. 1—Article from magazine, Food Topics, pages 34 & 35—entitled “Host of Chains, Independents Thrive in Cooperative-Led City”. . No. 2—Article from magazine, Su- permarket News, dated October 22, PO eS pice ed ais bY) 5 HEN Os thats No. 3—Article from magazine, Su- permarket News, dated October 15, ee i uaed (abe Vibe sabes nis. | No. 4—Article from magazine, Su- permarket News, dated May 6, 1963 Transcript of proceedings, June 14, 1963......___.. 2294 Testimony of William F. Brown —direct (by Mr. Coyle)... . 2295 —cross (by Mr. Vaughn)..... 2308 Examination by court....__. . 2310 —cross (by Mr. Vaughn)..... 2315 Examination by court... _. ... 2326 —redirect (by Mr. Coyle). ... 2329 Examination by court....__. . 2330 Colloquy between court and counsel.......__.. 2345 Rebuttal testimony of Ward J. Jenssen —direct (by Mr. Coyle)... 2363 —cross (by Mr. Alsup)....... 2396 Surrebuttal testimony of Theodore A. Von Der Ahe (recalled) —direct (by Mr. Alsup)..... 2440 —cross (by Mr. Coyle)... ._. 2451 I in BSF ate wane Sed ce 2458 Colloquy between court and counsel... 2459 Transeript of proceedings March 23 and 24, 1964. . 2467 INS Gds Maier bac. Was soar ok 2470 SY MONI Fo ac, Shite Siva Ale 2471 Stipulation signed by court................_.. 2472 Argument on behalf of the Government re issues 2473 Argument on behalf of the defendants... _ 2537 Argument on behalf of the Government... __ 2558 Argument on behalf of the defendants ss _—_ 2701 Argunent ©) Lehalf of the Government......._—- 2748 Argument on behel! of the defendants _ v. Bes xl INDEX Record from the United States District Court, Southern Transcript of proceedings, December 7 and 8, 1964.. 2756 Colloquy between court and Ae eee 2759 Argument re findings.......--.----.2-ss0 00> 2768 Reporter’s certificate (omitted in printing)........- 2849 Plaintiff’s request for findings of fact and conclusions ee ts eee i i eee eet ee eee ee Government’s memorandum on the issues presented (omitted in printing)... ....-----. 622s Volume V Appendix—Chronology of the See Stipulation after trial ordered March 23, 1964...... Plaintiff’s Exhibits No. 1—List of “The 20 Largest Grocery Chains in the Los Angeles Metropolitan Area Ranked According to Sales in 1958”............ Ties No. 2—Statement showing “Comparison of Popu- lation of Los Angeles Metropolitan Area and 10 Leading States in the United States”) No. 3—Statement showing “Comparison of; Popu- lation of Los Angeles Metropolitan Aréa with 11 States and the District of Columbia”... .. No. 4—Statement showing “Position of Von and Shopping Bag Among the Ten Largest Grocery Chains in the Los Angeles Metropolitan Area” No. 5—Statement of “Pre-Merger Growth (1954- 1958) of Von and Shopping Bag Within the Los Angeles Metropolitan Area”............. No. 6—Statement showing “Changes in Concen- tration in 20 Largest Chains in the Los Angeles Metropolitan Area 1948, 1954 and 1958”. No. 7—Graph showing “Changes in Concentration in 4, 8, 12, 16 and 20 Largest Grocery Chains in Los Angeles Metropolitan Area”.......... No. 8—Graph showing “Concentration in 4, 8, 12, 16 and 20 Largest Grocery Chains in Los An- geles Metropolitan Area Before and After Von’s Shopping Bag Merger, Based on 1958 Sales”. . No. 9—Supplemental Interrogatory No. 8 and Answer BPE fear No. 10—Supplementa! Interrogatory No. 9 and De EEE PLIES PEL ELE E RULER EE No. 11—Admissions in Deposition of Theodore A. Von Der Ahe, President of Von’s Grocery Com- pany, on May 4,1961........ 0.0.0.0... No. 12—Defendants’ Answer to Plaintiff's Inter- rogatory No. 7B(2) District of California, Central Division—Continued Original 2323 2324 2328 2328 2329 2329 2330 2330 2331 2332 2333 2338 2344 2346 ‘ + Neg hit RAMP PL ESA GRINS ER RHE YD IAT NMR A RIOR SRR a ts RES RIES ARGS SHEE OT IRE OA IE p sit a SERRA RAR TERT. ESE | — INDEX Record from the United States District Court, Southern District of California, Centrai Division--Continued Plaintiff’s Exhibits—Continued No. 13—Supplemental Interrogatory No. 5 and MN so eaten NG cat eke ea No. 18—Admission in Deposition of Theodore A. Von Der Ahe, President of Von’s Grocery Com- Hayden, Former President of Shopping Bag the Year Ended (?)” Years 1957, 1958 and NG St WO OR eo AER EER T ES Original 2357 2360 2363 2367 2369 2377 2379 2382 2385 2398 2401 2402 2403 2407 2409 xiv INDEX Record from the United States Distriet Court, Southern District of California, Central Division—Continued Plaintiff's Exhibits—Continued No. 34—Table showing “Number of Grocery Stores, Actual and Per 1,000 Population—Los Angeles Metropolitan Area, 1950-1961”....... No. 35—Table showing “Comparison Between the Permits Issued to Single Outlet and Multiple Outlet Grocery Stores in the Period 1961-1963” No. 36—Statement showing “Grocery Store Open- ings and Closings in the Los Angeles Metropoli- tan Area for the Calendar Year a No. 37—Statement showing “Frequency Distribu- tion of Gross Sales of Grocery Stores Obtaining Permits in the Los Angeles Metropolitan Area for the Calendar Year 1960”..........-.---)- No. 38—Statement showing “Analysis of the Gross Sales of The Grocery Stores Obtaining Permits in 1960 and Discontinuing Such Per- mits by November 15, 1961 in the Los Angeles Metropolitan Area”.......---- 65-502 No. 39—Statement showing “Frequeacy Distribu- tion of Gross Annual Sales of Grocery Stores Obtaining Permits in 1960 and Discontinuing Permits by November 15, 1961 in the Los An- geles Metropolitan Area”.......--.--- a No. 40—Statement showing “Frequency Distribu- tion of Grocery Stores Obtaining Permits in 1960 and Discontinuing Permits by November 15, 1961 in the Los Angeles Metropolitan Area” No. 41—Statement showing “Grocery Stores Which Obtained Permits in 1960 and which still retained their permits as of November 15, 1961 expressed as percentages of all permits issued within specified categories”... No. 42—Statement showing “Grocery Stores Ob- taining Permits in 1960 and Discontinuing Per- mits by November 15, 1961 in the Los Angeles Metropolitan Area”... ...0 2-0-0 No. 43—Statement showing “Estimated Annual Sales of Grocery Stores Opened in the Los An- geles Metropolitan Area in 1960 Expressed in Thousands of Dollars and showing Percentage Distribution” ...........-----0e seers ae No. 44-—Statemeni showing “Retail Food Store Acquisitions of 9 of the Top 20 Grocery Chains in the Los Angeles Metropolitan Area 1949- 1958” . ny. J AOLELO HEME IAS _ “ Original Print 2411 ep es 2412 2412 2413 2414 2415 2415 2416 2417 2417 2418 —, INDEX Record from the United States District Court, Southern District of California, Central Division—Continued Plaintiff's Exhibits—Continued Grocery Co. and Shopping Bag Food Stores, dated January 25,1960... ....s—«™ No. 48—Von’s Grocery Co.—Notice of Special Meeting of Stockholders, March Aly IOOO. os. No. 49—10-page undated memo entitled “Exeerpts from J. C. Ball’s Working 5 eee No. 50—Statement showing “Projected 1960 Net Income Resulting from Combined Operations”, No. 57—Letter from Don Bushmeyer, Mgr., to Mr. W. R. Hayden, dated September 29, 1959 No. 61—Agenda, Executive Meeting—No. 2, March 15, 1960 S No. 62—Special Memo, dated March 17, 1960 from H. G. Ward and N. H. Bolstad to G. Carter, et al. ; No. 63—Minutes of Executive Committee Meet- ing, Von’s Grocery Co., March 29, 1960... a Original . SHEE | ee RELLY POMEL ET NERO OG , xvi INDEX Record from the United States District Court, Southern District of California, Central Division—Continued Plaintiff’s Exhibits—Continued No. 64—Interrogatory No. 11 and Answer with Exhibits A, Band C......-.----- 0 No. 65—Interrogatory No. 2 and Answer (As Mim eda a heise RR ENS HOR RENO TESS No. 66—14 pages of handwritten notes entitled “Von’s Survey Shopping Bag by Division Heads, December 19, 1959”.....- No. 67—Admissions in Deposition of Theodore A. Von Der Ahe on May 4, 1961.....--- No. 68—Admissions in Deposition of William R. Hayden, Former President of Shopping Bag Food Stores, on May 12, 1960.........-- No. 69—Admissions in Deposition of Theodore A. Von Der Ahe, President of Von’s Grocery Com- pany, on May 4, ME ck uae beumereenet ys No. 70—Admissions in Deposition of Theodore A. Von Der Ahe, President of Von’s Grocery Com- pany, on May 12, 1960........--. Be Dalene No. 71—Admissions in Deposition of Theodore A. Von Der Ahe, President of Von’s Grocery Com- pany, on May TS” eae ee No. 73—Application for Seller’s Permit and Registration as & Retailer and Department of Employment Registration as an Employer, State of California Board of Equalization, Department of Business Taxes—Sales Tax for Mr. Charles B. Doss, Los Angeles, California. . No. 74—Table 3—Comparison of Chains of Less than Ten Stores with Chains of Ten or More Stores in Terms of Total Number of Stores Operated and Percentage of all Chain Stores for the Years 1953 and 1962”..........--- No. 75—Table 4—“Comparison in Number of Grocery Stores and Percentages of all Grocery Stores in the Los Angeles Metropolitan Area Between the 40 Chains with the Most Stores in 1953 and the 24 Chains with the Most Stores in WEP LD us axas sb bp ta chee emen ys ess ts * No. 76—Table 5—“Number of Grocery Stores Operated by Chains Expressed as a Percentage of All Grocery Chains Operated in the Los An- geles Metropolitan Area in 1953 and 1962”... . No. 77—Table 6—‘“Chains Operating in the Los Angeles Metropolitan Area in the Period 1953- Sc ag pee pede haves een snmens shes Original 2496 2499 INDEX xvii Record from the United States District Court, Southern ; District of California, Central Division—Continued f Plaintiff's Exhibits—Continued Original Print i No. 78—Table entitled “Food Chains Operating 2 ) or More Stores in Los Angeles and Orange : Counties in 1953 and 1962, with Changes in Intermediate Years......................... 2503 Grocery Stores and Shopping Bag Food Stores, WS ickbd pind ie bokeh ss catches ck. 2517 ) No. 80—Sales & Marketing Map—Los Angeles Metropolitan Area showing location of Von's Grocery Stores and Shopping Bag Food Stores, M5 Go ly giver ue ae, Grocery Stores and Shopping Bag Food Stores, BOE Sika wchbecoiie, deetiaaetl ek. WEED \arkhharr aed incase resin nck i. No. 83—Overlay map showing population of Los Angeles and Selected Southern California Coun- ties 1960—Each dot represents 1,000 persons. . Defendants’ Exhibits A—Letter from John B. Marshall to Mr. William W. Vaughn, dated May 16, 1961 with table en- titled “Number of Permits to Sell Tangible Per- sonal Property Issued to Grocery Stores and Other Food Stores in Los Angeles and Orange Counting, SUPINE)... _— ae EEE REE ig Ke ie Cs alia oe | Seas SAPO ARES AINA THY I OE EE EMIT — xvili INDEX Record from the United States Distriet Court, Southern District of California, Central Division—Continued Defendants’ Exhibits—Continued Original F—Table A—Names and Addresses of Grocery Stores of Multiple-Outlet Concerns in the Los Angeles Metropolitan Area that were Closed Out (Discontinued Without a Successor) Dur- ine 10GB. ice eccrenscnescrerccenarareen ss —Table A—Names and Addresses of Independ- ent Grocery Stores in the Los Angeles Metro- politan Area that were Closed (Discontinued Without a Successor) During 1960......... —Table B—Names and Addresses of Grocery Stores of Multiple-Outlet Concerns in t!. Los Angeles Metropolitan Area Opened in 1960 and Closed by November 15, 1961..........--. +. —Table B—Names and Addresses of Independ- ent Grocery Stores in the Los Angeles Metro- politan Area Opened in 1960 and Closed by November 15, 1961..........--.0 0 reer eeees 2537 J—Report entitled “Record of Chain Grocery Store Locations in the Los Angeles Market [re Ty. Ser a) bag bbe ALS, 2539 trial Manual (1962) and Supplement thereto. . 2568 dated December, 1959........-...- +5 550505 2574 S—Map Overlay Study for Von’s Grocery Com- pany, October 1955—A Report prepared by Facts Consolidated in October, 1955, showing the Limited Radius of the Drawing Areas of Each of Von’s Stores ........-------+++-+: 2623 AA—Series of Lists entitled, “Names and Ad- dresses of Customers Cashing Checks at Store Number ——” 2631 Volume VI AF—Report entitled “A Group of Supermarket Chains in the Los Angeles, California Area. A Report prepared by a Representative of the Kroger Company in August, 1957, Analyzing the Von’s and Shopping Bag Stores and the Competition Each Faces in Its Particular Lo- eality ee 2747 SLOANE OU RE MEY CRY ey? INDEX xix Record from the United States District Court, Southern District of California, Central Division—Continued Defendants’ Exhibits—Continued Original Memorandum opinion, Carr, J., dated September 14, te: SE EIEN GATE December 17, 1964.....__. WO F000 eke oe ~ 2 > MB I GH 5 —w : PER PELAE I IOME AGS EH EL NLP ite wae Pe ee Q. When did the Safeway Store come into the area? A. About the same time. Q. Before or after? A. I think Ajax closed up after Safeway opened up. I wouldn’t be too positive about it but I think he closed after Safeway opened up. Q. You referred to Ajax and Safeway. What other grocery stores were in this area at the time you bought it in August of 1958? A. There is a Shopping Bag, there is Gelsinger’s Meat Marketi Q. I am sorry, I missed that. A. There is Gelsinger’s Meat Market, Shopping Bag, [fol. 46] and then on Honolulu there is another small one, Honolulu Market, which is a liquor store and small market. And that’s on Honolulu about the stores that are there. Q. On Honolulu. But you referred to your draw area as going up to Foothill and Montrose and up to La Cres- centa. A. There is a Spike Jones Market, corner La Crescenta and Foothill. There is a Bert’s Market on Honolulu past Country Cousins. That is about the closest ones near my area. Q. That is all within this two mile radius? A. There are more small stores but I wouldn’t have a record of all of them. Q. In this time since you have been in the business, Mr. Barondess, since August of ’58, has your study of the gro- cery business been largely confined to your immediate operating area? A. No. I tried to look at the industry as a whole. I have been getting publications and know what’s what, try- ing to keep abreast of things. Q. In your own immediate area you have seen one store close up and one come in, in the time you have been in there; isn’t that right? A. Yes, that’s right. Q. Have there been any discount houses opening in that general area? [fol.47] A. No, not in my immediate area. Q. What is the nearest discount house to you? A. The nearest discount house I would Say is practically 1 Ne TNT ARCA FR NEW Pheer RRS —_— — 54 on the other side of Glendale near the industrial, Robert Morton, if I am not mistaken, which I would say is a good seven or eight miles from me. Q. They have a food center in this discount house? A. I havn’t been in there but I think they have a certain amount of foodstuffs in there. Q. In your reading of the trade papers since you have been in the business, commencing August 1958, you have read about discount houses opening up all over the area, havn’t you? A. Yes. Q. With food centers? A. That’s right. Q. Supermarkets? A. Yes, I read of the A-1 in the Valley, what he is doing. Q. In this same period of time have you read about the bantam markets opening up in this area, so-called Speedee Marts and Pronto Marts and TinyTim’s? A. Yes, I have read about them opening but there were none in my area. Q. And you wern’t concerned with them if they wern’t [fol. 48] in your area, I take it? A. Well, I read what they were. I mean I was familiar with their operation. But, as I say, in my area they did not open up so I didn’t get a personal look at them. Q. Have there been any new liquor stores opening up in your area in this time? A. No. There is one pending now that is trying to open up and he is having a battle. Wait a minute, there is one opened up, that’s right, about three years ago, about three blocks from me. ; Q. Does this liquor store sell products besides liquor? A. Such as bread and milk, as far as I know. Q. And some canned good items? A. Hardly any. I wouldn’t say that. Q. In your study of the business since August of °58 have you noticed that the liquor stores are selling more and more grocery items all the time in this area? A. Well, I have seen several of them. I have seen some that are strictly liquor and I have seen some that are more grocery than liquor for the simple reason of trying to peddle off an expensive license for sales on low priced items. ba a) Ee BY "A GePR ye Q. Have there been any drive-in milk depots opening up in your general area? [fol.49] A. I understand one opened up on Foothill about, I would say, three miles from me. There is one opened up on Foothill Boulevard. Q. This is a matter which you have read in the trade papers that most of the grocers are really complaining about, isn’t it, these milk depots? A. Well, let’s put it this way, they are no help. Q. Pardon? A. They are no help to the grocery business. Q. This is something that is quite new since you have entered the business, isn’t it? A. That’s right. Q. They not only sell milk and ice cream but weiners and bread and potato chips and other items, don’t they? A. Yes. Q. There seem to be more and more of them all the time in this area; isn’t that true? A. Well, as far as I know the Glendale area there is three of them. In the whole Glendale area that I know of. Two in Glendale proper and one up on Foothill Boulevard. I am not sure whether it is in the Glendale annex or outside the Glendale annex. But I know it is not far from me, about three miles from me somewhere. Q. But you testified that you tried to keep generally familiar with what is happening in this Los Angeles and [fol. 50] Orange Counties area, didn’t you? A. That’s right. Q. You notice from the trade papers there has been more and more of this in recent years? A. That’s right. Q. That is also true of the discount houses, isn’t it? A. Yes. Q. What trade papers do you subscribe to, Mr. Baron- dess? A. There is quite a few of them. May I refer to this? Q. Sure. You don’t recall yourself? A. The names are so interchangeable and I don’t want to quote a wrong name. There is Supermarket News, there is the Food Mart. I don’t recall the exact names of them. 56 Q. Do you read the Supermarket News pretty carefully? A. As time allows I do read it fairly good. Q. I have an article here, Mr. Barondess, taken from a recent issue of Supermarket News. I would like you to look at it and tell me if you read that article. A. I remember seeing that article. Q. That conforms to your general understanding based on your study of the industry, that article, doesn’t it? A. Yes. Q. Haven’t you observed in your study of the industry, Mr. Barondess, this frequently is the case that the chains [fol. 51] furnish the training and experience and back- ground for people who decide, after they have got it, to leave the chain and go into business and start their own business and prosper? A. Well, I could put it another way. The people that go in with the chains will, if they are smart, never tackle an independent business. After they observe the chain oper- ation. Q. You read this article about Mr. Hughes and Mr. Goodnight? A. Yes. There is quite a few of them that have gained their experience and been good, and quite a few of them will be discouraged by the operation when they see what they have to compete with. Q. Are you acquainted with Ted Wood of the Pantry Markets? A. No, I am not acquainted with him. I mean I have heard of him. Q. You are familiar with the Pantry Markets over in the Altadena and Pasadena area? A. Yes, I have heard of them. Q. You know Mr. Wood got started sometime in 1954 and has been very successful and has grown into a ten or eleven store chain? A. L understand he is quite successful. [fol. 52] Q. You know Mr. Goodnight left Alpha Beta in 1959 and started Michael’s Markets, don’t yout You read about that? A. Yes. Q. And he has been able to develop a successful chain in that time, has he not? ae eT eee ae Nl RR i ke LS ‘ner SO SOY } A. I would assume so. Q. And there are others? A. There are a few. But I wouldn’t say they are plenti- ful. There are afew. There are some people that are quite outstanding but they can get enough finances and they are successful at certain things. Q. This Paul Palmer of Country Cousins has a store near you and he is a good example of that, is he not? A. Well, I don’t think I would call Paul Palmer a good example of success in market operations. Q. Why is that, Mr. Barondess? A. Why is that? If I assume correctly, he has made his money on the real estate angle of it. He has bought markets cheaply when neighborhoods built up around it and it has paid off. And more or less he is developing his own, what you would call shopping center, bowling alley and stuff like that. So I wouldn’t attribute it to his success in the gro- cery business. Q. These properties that he has bought cheap, they (fol. 53] are basically grocery store properties and then the area builds up and he has sold them off. A. Shopping area centers, in the one out at Thousand Oaks, it is complete shopping center areas. I don’t think that he is doing fantastic with the one in Verdugo City. Q. You are a member of Certified Grocers? A. That’s right. Q. When did you join Certified? A. When I purchased the store. Q. I gather from the sign in the window, the picture we have marked as Barondess Exhibit No. 1 for identification, you get your milk from Knudsen Dairy? A. That’s right. Q. Is Knudsen a well advertised milk? A. Does Knudsen advertise milk? Q. Is it well advertised? A. It is well known milk. I don’t think they are well ad- vertised but it is well known milk in the area. Q. It has good public acceptance? A. It has public acceptance, that’s right. Q. And the price at which you sell that milk is fixed by State law, is it not? A. Yes. 58 Q. And the price at which Von’s sells Jerseymaid is fixed by State law, isn’t it? [fol. 54] A. The minimum prices, yes. Q. You can’t go less than a certain price. The milk depots have an advantage in that respect, don’t they? A. It is not the question of what you sell, it is a question of what discount you get. Q. You don’t know whether or not Von’s investment in Jerseymaid pays them any more if they had invested the same amount of money in Knudsen stock, do you? Mr. Coyle: You are arguing with the witness, Mr. Alsup, you are not asking questions. The Witness: I wasn’t trying to tell you that. I was trying to tell you that when the setup on the milk discount came out I was forced to eliminate—where I had two milk companies for choice of my customers, I was forced to go to one. Eliminate one so that instead of getting, let’s say three or four cents from both of them I could get nine or ten cent discount from one. In other words, I was not able to give my customers the choice of milk. I had to stick with one in order to be able to come out on milk. Q. Von’s has an investment in Jerseymaid; right? A. Right. Q. And the price at which it sells that milk to the public is fixed by State law; right? A. Right. Q. Von’s presumably makes money on its investment in [fol. 55] Jerseymaid; right? A. I presume so. Q. Just like Paul Palmer makes money in his investments in real estate. A. Right. Q. Paragraph 8, Mr. Barondess, of your statement says that on the basis of your continuing study of the retail grocery industry in this area you are in agreement with the defendants’ exhibit showing that in the period between 1950 and 1958 the market share of the eight largest, the nine largest, the 15 largest and the 20 largest increased. You weren’t making any study of the industry prior to your purchase of your store in August of 1958, were you? A. No, I wasn’t making a study of it but those figures ERE ES RENE MEN ALDINE UEP NIE TE MIE EY TRE 59 were pointed out to me and I agreed with them on the basis of my knowiedge of the—— Q. Knowiedge of what? A. My knowledge of the grocery business when I went into it, that’s all. Q. Was it pointed out to you that the share of the top three declined between 1952 and 1960? A. Decline? Q. Yes. A. From 1960 to what? Q. From 1952 to 1960. [fol.56] A. I don’t think it declined. I think they in- creased. Q. What is the basis for that statement? A. What? Q. What is the basis for that statement? A. Well, from what I have read and what I have been told, what I have seen, they couldn’t have declined. Q. Their sales might have increased but their market share might have decreased; isn’t that possible, Mr. Baron- dess? Q. Was it pointed out to you, when you were shown these exhibits, that the share of the top four declined between 1952 and 1960? A. Decreased? Q. Yes. Was that pointed out to you? A. No. Q. Was it pointed out to you that the share of the top five decreased between 1952 and 1960? A. Not decreased. Q. That was not pointed out to you? A. No. Q. All that was pointed out to you was that the share of the top eight, top nine, the top 15 and the top 20 increased between 1950 and 1958, is that correct? A. Yes. (fol. 57] Q. You state in Paragraph 9, Mr. Barondess, that Shopping Bag was a profitable operation prior to its merger with Von’s, that you had observed the operations prior to the merger. What observations had you made on the basis of which you concluded that Shopping Bag was a profitable operation? 60 A. Well, they had considerable number of stores. I think it ran about 29 stores or something—28 or 29. Their stores were always well managed, well stocked. I know they were instituting their own warehouse and pulling away from Certified. And on that basis I concluded that their operation is successful. Q. That was the basis on which you concluded that Shop- ping Bag was a profitable operation; right? A. Yes. They were a growing organization. Q. In that same period prior to 1960 Fox Markets was a profitable operation then, wasn’t it? A. Fox Market was supposed to have been profitable but I also heard that they were owing people a lot of money, such as Arden and Olson Eggs and stuff like that. And when I heard those astronomical figures what they owe, they are not paying bills, I was beginning to wonder. Q. That was after they went into bankruptcy, wasn’t it? A. No. You heard those rumbles before they went into [fol. 58] bankruptcy. Q. Not back in 1960 or ’59, did you? A. I always heard that Fox Markets were owing big sums of money to Arden’s and Olson and several others. Q. Fox was a rapidly growing concern up until 1961, wasn’t it? A. They were. Q. And they had big stores? A. Yes. Q. And they appeared to be well managed? A. Yes. Q. How about McDaniel’s, they appeared to be a very rapidly growing concern back in 59, 60 and ’61, did they not? A. Well, they were a growing outfit but I wouldn’t put them in the same class as Shopping Bag. Q. Why is that? A. Well, McDaniel’s, first of all they were a smaller chain. Seeond of all they did not indicate any saving such as their own warehouse, such as Shopping Bag. All that I didn’t classify them in the same class as Shopping Bag. Q. In your reading of these trade papers didn’t you read about McDaniel’s getting up at the end of 1960 to a 24-store chain? RRS Se iy BS, ; = “ge - - . NDEI MORLEY. INS RNG PORIRUA GEL IORI R LL ARF at FONE REOUEIN RAIN He TRG NTE BY EO , . 61 A. I don’t think it was that high. I ‘hink it was 16 or [fol. 59] 17 when I referred to McDaniel’s. But I know definitely that he did not make any steps toward warehous- ing his own merchandise. Q. Did you read in ‘the trade papers that MeDaniel’s and Fox both expanded too rapidly with inadequate capital and got into financial troubles? A. Yes. Q. And they both went into bankruptcy; isn’t that right? A. Didn’t MeDaniel’s sell off? Was McDaniel’s bank- raptcy or just a sell-off of individual stores? Q. Didn’t you read that McDaniel’s sold off a number of individual stores to individuals and small chains? A. That is what I read, they sold individual stores. Hughes bought several and somebody else bought several and all that stuff. But I didn’t think it was bankruptcy. Q. And then I think they went into bankruptev Isier. }idn’t you read the same thing about Yor-Way? A. Yes. Q. That was another case of a chain that appeared to be profitable and expanded rapidly and then got into financial troubles and went into bankruptcy in ’61 or ’62; isn’t that right? A. Well, that’s right, they went—I don’t know what caused them to go into bankruptcy, but from all appearances (fol. 60] they jast couldn’t—they were not expanding as - rapidly as Shopping Bag, and also they did not have their © own warehouse facilities. Q. Are you sure of that, Mr. Barondess? A. Yor-Way? * Q. Yes. A. Yor-Way I don’t think had their own warehouse. Q. Are you sure McDaniel’s didn’t have a warehouse? A. Not to the extent of what I mean warehouse in every bit of merchandising. Sure every chain has a certain amount of warehousing. Q. Shopping Bag had a warehouse before it merged with Von’s, did it not? A. They had just completed it then, if I am not mistaken, about a year before or so, somewheres around that time. Q. That was their new warehouse out in El Monte, wasn’t it? 62 A. Yes. Q. And they had one before that. A. Well, they were buying a big share from Certified until they completed their new warehouse. ~Q. And Von’s had a warehouse before it merged with Shopping Bag, did it not? A. I assume so. [fol.61] Q. You don’t know? A. About Von’s I wouldn’t say. I am not familiar with it. Q. If they both had warehouses before the merger the merger didn’t change that situation at all, did it? A. If they both had warehouses, no. Q. Before the merger Shopping Bag could get into shop- ping centers, couldn’t it? A. I assume they could. I wouldn’t know but I imagine they could. Q. You don’t know if they were in any shopping centers? A. If they were in any shopping centers? I know they had quite a few stores in shopping centers. They were contemplating new purchases at all times. Q. And before the merger Von’s could get into shopping centers; right? A. Yes. Q. And the merger didn’t change that situation, did it? A. It might have, it might not. I am not one to judge on that. Q. You don’t know? A. I mean twenty million and twenty million is good credit, but sixty million is better. Q. What other large chains do business in this area, Mr. Barondess? [fol. 62] A. In the Glendale area? Q. No. In the Los Angeles metropolitan area. A. There is Ralphs, Alpha Beta, there is Cracker Barrel, but I wouldn’t call them a chain. Q. They are a small organization. A. A small one in comparison. The Fox Markets that were taken over by American Foods. Q. Food Fair? A. Food Fair, I mean. There is Food Giant and there is two more or so, I think. | LRN TT EA OE LTE — EES IOP AE Ho: Q. Boy’s? A. Boy’s Markets. Q. A&P? A. A & PI don’t think is a big factor in the food market in the Los Angeles area for some reason. Q. They have about 18 or 20 stores, don’t they, Mr. Barondess? A. They have a certain number of stores out here but I don’t think they are a big factor in the food industry out here. Q. From your reading in these trade papers would you say that A & P is the largest retail grocery concern in the United States? A. Yes. Q. Have you read that it does about five billion dollars [fol. 63] a year total business? A. Somewhere around there. It’s an astronomical figure for me. Q. And for me too. You didn’t mention Safeway. A. Safeway is a major chain, that’s right. Q. Have you read that Safeway is the second largest national chain in the United States? A. Yes. Is Safeway second or is Kroger’s second? Q. I have read that Safeway is but I will take your word for it, Mr. Barondess. A. I don’t know. It’s a tossup. I would engage them with a slide rule. I was under the impression that Korger’s has quite a substantial empire in the food business. Q. Korger is not doing business here, fortunately, yet. A. Fortunately. For how long I don’t know. Q. The American Stores, I think they are called Acme Markets, Inc., has entered this market by acquiring Alpha Beta; isn’t that right? A. Yes. Q. And they are generally considered to be the fourth largest national chain; isn’t that right? A. They are considered pretty big, yes. Q. And more recently Foed Fair acquired these remain- ing Fox Stores out of bankruptcy and they are now doing (fol. 64] business here, you mentioned. A. Yes. 64 Q. And they are generally considered to be the sixth largest national chain; isn’t that right? A. I presume so. - Q. You didn’t mention Thriftimart. A. I didn’t think of it. Thriftimart is a factor in the Los Angeles food area. Q. And Mayfair? A. I told you there is quite a few of them. I didn’t memo- rize them that they should stick in my mind immediately. Q. As a matter of fact, there are a large number of so- called larger chains, a large number of smaller chains like Hughes and Shoppers and Pantry and so forth, are there not? A. Yes. Q. And an even larger number of smaller chains like Country Cousins and Michael’s Markets and Cracker Barrel that you mentioned. A great number of those, are there not? A. Well, from my observation I would say that they are on the diminishing point. Q. You would? A. Yes. Q. That is based on your study of the industry? A. Yes. [fol.65] Q. There are several single store operators doing business in Los Angeles and Orange Counties, are there not? A. There are. Q. Mr. Barondess, do you have any knowledge whatsoever that Von’s intends to merge with anyone else? A. No, I have no knowledge. But I assume that if the merger of Von’s and Shopping Bag will be successful that eventually there will be a merger of several more. Q. And that is pure imagination on your part? You are speculating, are you not? A. Well, it is not imagination. It is the growth of a cer- tain thing that you see just magnifies and grows. I mean if you take two chains merge and they are successful, even- tually they will merge with a third and fourth and they could control the market. Q. You have seen in this study of the industry that Fox engaged in a number of mergers and acquisitions, did you not? A. Yes. aT Pe — oe) 65 Q. And they got into financial trouble and went into bankruptcy; isn’t that right? A. Yes. Q. And the same thing is true of Yor-Way, is it not? A. I am not familiar on what their acquisitions and mergers were but I know they went into bankruptcy. [fol.66] Q. And you know McDaniel’s made several ac- quisitions and got into financial trouble and went into bankruptcy, don’t you? A. I know they got into financial problems. What their acquisitions were offhand I don’t know. Q. These chains which you list in Paragraph 10 of your statement, do you have any knowledge that any one of them intends to engage in any merger in the future? A. Well, I have heard talks that Ralphs and Kroger were negotiating on a merger. How much of it has gone through I don’t know but I have heard of such talk. Q. Just rumors? A. Well, I wouldn’t say it is rumors, but it is shop talk. Q. Any others? A. Offhand I wouldn’t commit myself—I mean I couldn’t pinpoint it. Q. Paragraph 13 of your statement, Mr. Barondess, says that you would testify there have been a number of acqui- sitions and consolidations in the retail grocery field since 1948. Now, you entered into the business in August of ’58. Before that you had been engaged in the restaurant, hotel and machine shop businesses; right? A. Right. Q. What mergers were you referring to in this Para- [fol. 67] graph 13? A. As I say that was before I got in and I wouldn’t re- member the name, but it was pointed out to me there were certain mergers and I took that for granted. Q. Who pointed this out to you? A. I mean in the publications they were mentioned. Q. What publications? A. The trade publications. Q. And you can’t recall a single one? A. No. Not everything would register with me, I regret to say. 66 Q. Was it pointed out to you that Fox had acquired Iowa Pork Shops? A. I wouldn’t recall that. Q. Was it pointed out to you that Yor-Way had made some acquisitions? A. It was pointed out that Yor-Way made acquisitions. I know it was pointed out that Mayfair and Arden’s had combined in the food business. But I couldn’t pinpoint every detail. My memory is not that good. Q. You don’t know whether Mayfair has sold more stores in this area than it has acquired, do you? A. No. Q. Paragraph 12 of your statement, Mr. Barondess, says that you would testify you face vigorous competition from [fol. 68] Von’s. What Von’s stores are you referring to in that Paragraph 12? A. Well, there is a Von’s-Shopping Bag Market in the area. There are several in Glendale. But the immediate area, when Von’s right after the merger of Von’s and Shopping Bag, there was a definite trend to cutthroat prices on staple items to lead customers their way. Q. So you are referring to the Shopping Bag Store in your area} A. I am referring to the Von’s-Shopping Bag. It is not Von’s-Shopping Bag any more. Q. Before the merger this was a Shopping Bag store. A. Yes. Q. And before the merger there ware Shopping Bag stores in Glendale? A. Yes. Q. No Von’s stores? A. Yes, Glendale had a Von’s store. Q. Where in Glendale? A. No, I don’t think Von’s is in the Glendale area. Q. Have you seen any lessening in the vigor of competi- tion in this area since the merger of Von’s and Shopping Bag? A. Lessening? Q. Yes. [fol. 69] A. No. Since the merger I have seen an in- crease in the competition. Q. You state in Paragraph 14, Mr. Barondess, that this 67 merger of Von’s and Shopping Bag is a ‘‘major stride in increasing the market share of the large chains.’’ Do you know how much this increased the market share of Von’s when it merged with Shopping Bag? A. Percentagewise? Q. Yes. A. Offhand I couldn’t form any opinion. I assume it increased substantially. Q. You assume that but you have no knowledge of what Shopping Bag’s market share was before the merger? A. In dollars and cents? . Q. No. I am talking about percentage of food sales in this area. A. I wouldn’t want to quote the figure, but I mean I have an idea, but it would be very rough. Q. Will you give me the rough figure? A. Shopping Bag alone? Q. Yes. A. Shopping Bag I would say had about ten per cent of the food sales. Q. How much would you guess that Von’s had before the merger with Shopping Bag? [fol. 70] Mr. Coyle: Why ask him to guess? If you want guesses on the record let him guess if you want to. Mr. Knight: What good is a guess on the record? Mr. Alsup: Q. Will you answer, Mr. Barondess? A. I would say they had about ten per cent, somewheres around there. Q. What market share would you say Safeway had in this area before the merger of Von’s and Shopping Bag? Mr. Knight: Are you going to guess, Mr. Barondess? The Witness: Well, I don’t remember the figures so I couldn’t quote accurately. Mr. Alsup: Q. But you have studied the industry, you say, since you got into it in August of 1958. Mr. Coyle: You are arguing with the witness, Mr. Alsop. He says he doesn’t know. Mr. Alsup: Q. I would like your best judgment. A. I am not an engineering expert and I did not memo- rize every figure that I glanced at. Q. This is what you had in mind when you said that this merger was a major stride in increasing the market share of the large chains? A. In my opinion it is. It is a merger towards future mergers if proven successful. Q. And if it proved unsuccessful it would discourage them, like Fox? (fol. 71] A. In other words, if they were to go bankrupt, if it would benefit anybody; is that what you are trying to say? Mr. Hughes: Is the question clear to you? The Witness: No, I don’t understand the question. Mr. Alsup: Q. You say if it is successful it might en- courage other mergers. A. Definitely so. If that merger is successful it will acquire more and merge with more, and you will definitely have a monopoly in the food industry. That is the way I see it. Q. This merger took place more than three years ago, Mr. Barondess. What mergers have occurred since then? A. In the area? Q. Yes. A. The one that we mentioned, the Food—— Q. Food Fair picking up the remaining Fox Stores out of bankruptcy? A. Yes, sir. Q. Since the merger of Von’s and Shopping Bag we have seen three chains, McDaniel’s, Fox and Yor-Way, which had engaged in merger activity go into bankruptcy, haven’t we! A. I have seen McDaniel’s go into liquidation. I don’t know whether they went into bankruptcy. I have never heard of that proceeding. But I know that they have [fol. 72] liquidated their stores. For what reason, it could be that they found competition too stiff. Q. How about Fox? A. Fox, from what I assume, expanded too rapidly be- yond their means of capital. Q. How about Yor-Way? in dh il A. Yor-Way I am not familiar with why they went, but they went under. I know they went into bankruptey. Mr. Alsup: No further questions. Mr. Hughes: I would like to introduce the statement en- titled ‘‘Testimony of Solomon Barondess’”’ as Barondess Exhibit No. 2. (The document referred to was marked by the notary public as Barondess Exhibit No. 2 for identification, a car- bon copy of which is attached in lieu of the original.) Cross-examination. By Mr. Hughes: Q. Mr. Barondess, in looking at Baroness No. 1, the picture of your store, I can’t find the Bailey’» parking lot sign that Mr. Alsup referred to. Would yow point it out, please? A. It is not in the picture. The sign would be to the left of that picture, but the picture did not take it in. (fol. 73] Q. Did you name your market the Trade Rite Market or was that the name Mr. Bailey used? A. That was there. Q. Mr. Bailey called it the Trade Rite Market also? A. All the time. Q. Mr. Barondess, do you ever read financial reports in the trade journals on grocery chains? A. I read when I get a chance, yes. Q. Do you read the Wall Street Journal? A. Wall Street Journal? Not too often. Q. Did you ever have occasion to read Von ’s-Shopping Bag’s annual reports in the Journal or in the trade jour- nals? Mr. Alsup: Are you talking now since the merger? Mr. Hughes: At any time, presently. The Witness: I have seen it on several occasions but the figures did not register with me too much. I mean I have seen the figures. Mr. Hughes: Q. Can you recall ever having seen Shop- ping Bag’s figures prior to the merger for the year 19591 A. I think I recall it that I have seen it. But the figures 70 did not leave too much of an imprint. I mean I haven’t got a ‘‘photogenic’’ mind on figures. I should have had my daughter, she would. She is a math major. Q. Would you have recalled if you saw a local grocery chain was losing money? (fol. 74] Mr. Alsup: I object on the ground that it calls for speculation and conclusion. Mr. Coyle: Recollection is what he asked. Mr. Alsup: He said, ‘‘ Would you have recalled.’’ I have no objection to ‘Did you recall’”’ or ‘‘Do you recall.”’ The Witness: I recall there was several outfits that were mentioned losing money. Mr. Huzhes: Q. Do you recall that Shopping Bag was losing money in 19591 A. There was a statement to that effect that they were. Q. Mr. Barondess, you stated that your store is up for sale at the present time. A. Yes. Q. Why do you want to get out of the business? A. I find competition too keen. Q. Do you refer to any specific competition when you made that statement? A. Well, I would refer to the big chain competition, un- fair competition I would call it, even though there is a state law requiring that they sell with six per cent above cost. The major staples are being advertised way below cost and I just can’t compete with it. Q. Are you considering selling your store because of this milk depot down the street? [fol. 75] A. Well, milk is a big factor also. Before the milk factor was in I was able to have two dairies, Arden and Knudsen. I had to consolidate and go to one, and that doesn’t help me too much either. Q. Is your primary competition the big chains? A. Definitely. Mr. Hughes: I have no more questions. Redirect examination. By Mr. Alsup: Q. Your closest competition is the Country Cousins Store; isn’t that right? A. He is the closest store near me, but Country Cousin is not competition in the sense of ads—advertising in the paper. If you will compare ads you will see it. If you want I can bring you a couple of samples of the ads of the last few weeks. And I will show you that Country Cousins is not competition pricewise, Mr. Alsup: I would like to have marked as Barondess No. 3 for identification the clipping from the Supermarket News, which he said he had previously read. Mr. Hughes: Was it your statement that you read this article previously? The Witness: I have noticed it. I said I have seen it. (fol. 76] Mr. Hughes: This particular article? The Witness: Yes. (The clipping referred to was marked by the notary public as Barondess Exhibit No. 3 for identification, and is attached hereto.) Mr. Alsup: I have nothing further. Recross-examination. By Mr. Hughes: Q. Would you of your own personal knowledge know if that article contains matters which are true? A. No. Mr. Hughes: No more questions. Redirect examination. By Mr. Alsup; Q. This is the type of thing, though, that you read in the trade papers all the time and generally rely upon, is it not? Mr. Coyle: You are arguing with him, Mr. Alsup. The Witness: Well, I read these things and some of BEST COPY AVAILABLE PUBLISHER’S NOTICE Material on the following frames is the best copy available to publisher. 72 ‘hem I draw my own conclusions, some of them I disregard or don’t agree with. Mr. Alsup: Q. You have no reason for disagreeing with Mr. Hughes’ success, have you? [fol. 77] A. No. Q. Or Mr. Wood’s? You know he has been successful, don’t you? A. Yes. Q. You have read about Mr. Goodnight starting in the business a little after you did, after leaving Alpha Beta and opening a single store and becoming a very successful small chain, haven’t you? A. I have heard it. Q. That is common knowledge in the industry, isn’t it? A. Yes. Mr. Alsup: No further questions. Mr. Hughes: That is all. Mr. Barondess, do you agree to waive your signature to this deposition? The Witness: I do. Mr. Hughes: It is agreeable with counsel for Von’s? Mr. Alsup: It is agreeable with the understanding that it will be filed as his testimony. Mr. Coyle: I don’t understand about this being filed as his testimony. It is his deposition and we waive signing it. Mr. Alsup: It will be filed as if it had been signed. Mr. Coyle: It will be treated as if it had been signed. Mr. Alsup: Right. [fol. 77a] Testimony or Aprian BYNUM If called to testify, Adrian Bynum would testify as fol- lows: 1. Up until July 29, 1962, he was a partner in the opera- tion of Birmingham Market, a grocery store located at 17261 Vanowen Street, Van Nuys, Los Angeles County, California. He had been part owner of Birmingham Mar- ket for over four years. He had been in the grocery busi- ness for most of his life. For the last 12 years he has been a part owner of a grocery store. The gross sales of 73 Birmingham Market in 1959 were about $650,000. He re- cently completed arrangements for owing and operating a motel in Crescent City, California. His current home ad- dress is 1928 Crebs Street, Northridge, California. 2. In order to continue in business, a grocery retailer must keep well informed on every change in marketing conditions in the Los Angeles metropolitan area. He must be aware of all advertised grocery prices which his cus- tomers are apt to read. Therefore, when Mr. Bynum op- erated Birmingham Market, he closely inspected all grocery advertising by the major chains as it appeared in the metropolitan newspapers. He also regularly reviewed grocery advertising appearing in local papers. He sub- scribed to the ‘‘Black Book,’’ a booklet similar to the Key Services book, and followed the prices of all of the major [fol. 77b] chains appearing in those booklets. In keeping abreast of the retail grocery trade generally, he regularly read, among other publications, the ‘Commercial Bulle- tin,’’ ‘‘Super Market Merchandising,”’ ‘Chain Store Age’’ and the ‘‘Progressive Grocer.’ 3. On the basis of his continued study of retail grocery merchandising in the Los Angeles metropolitan area, the witness would testify that in the period since 1950 the num- ber of single store grocery retailers operating in the area declined. When shown the Government exhibits prepared by the State Board o° Equalization, he would state that they confirm his own observations. He would state that this lessening in the number of independent grocers has been obvious to him as a result of his observations. 4. He would testify that a single store operator cannot get into the more desirable shopping centers. It is a well- known fact in the industry that the major developers will not lease a shopping center location to anyone but a major chain. This is because only these chains have Triple A financial status and because the landlord wants the name of a big chain store in his shopping center as an attraction to other tenants. As a result single store operators do not have access to desirable locations in shopping centers. On the other hand, most of the new openings, particularly in the new shopping centers, have been made by the chains with Triple A financial status. [fol. 77¢] 5. He has observed that the decline in the num- Nien. sate , Re an oat ee Sek SDE ASEM Ne, “HOARE RS See Ta ERIM ST tat re renee nai papier ern creneene SAMY A TERS ~ PR Sa, bi siete 74 ber of grocery stores in the area also arises from the in- creasing size of supermarkets and their large, continually expanding dollar sales. The large supermarkets today serve many more people than they did in the past. As a result, fewer grocery stores are needed in the area to serve a comparable number of people. 6. The witness would testify that single store operators and small chains do not have their own highly developed distribution system. He would point out that he has ob- served that chains, such as Von’s Grocery Company and Shopping Bag Food Stores, operate large warehouses, are serviced directly by railroad shippers at those warehouses, and operate large trucking facilities. As a result, they are able to buy in heavy volume directly from the prodneer and deliver the product to their stores on their own trucks. This gives chains, such as Von’s and Shopping Bag, an advantage over independents and small chains in terms of inventory control. 7. He would also testify that he purchased from Certi- fied Cooperative and this enabled him to get certain of the advantages, such as quantity discounts, enjoyed by the chains on dry grocery products. He would state that the cooperative does not carry such major products as dairy, meat and produce items. However, he would testify that [fol. 77d] large chains, such as Von’s and Shopping Bag, belong to cooperatives but have decreased their purchases voluntarily when they developed their warehousing and distribution system. Thus, they have combined the ad- vantages of Certified with direct purchasing and a highly developed distribution system. In addition, some of the chains, including Von’s and Shopping Bag, belong to a dairy cooperative named ‘‘ Jersey Maid,’’ which gives them advantages over grocery stores which do not belong to Jersey Maid. 8. He would also testify that on the basis of his continued study of the retail grocery industry in the Los Angeles metropolitan area, he is in agreement with defendants’ exhibits showing that in the period between 1950 and 1958 the market share of the 8 largest chains in the area in- creased from 33.2 per cent to 39.0 per cent; the market share of the 9 largest chains increased from 34.5 per cent to 41.7 per cent; the market share of the 15 largest chains 75 increased from 38.4 per cent to 50 per cent; and the mar- ket share of the 20 largest chains increased from 40.5 per cent to 54.4 per cent. When shown the tables prepared from the Bureau of Census reports by the Government economist, he would testify that these figures also corrobo- rate his own understanding, based upon his experience, of the trends in the area. He would further state that the strike in 1959 definitely had an adverse effect on the [fol. 77e] sales of the largest chains. 9. He would state in his testimony that he observed the operations of Von’s and Shopping Bag prior to the merger. He would testify that both of these chains advertised ex- tensively on an area-wide basis, that they played a part in the -ompetitive merchandising of groceries in the area, that they were profitable operations which had experienced a history of successful growth and expansion. He would state that they were two of the largest chains in the area. 10. He would state that Von’s and Shopping Bag, along with Ralphs, Safeway, Market Basket, Thriftimart, Alpha Beta, Mayfair and Food Giant, were among the leading firms in the area. 11. He would testify it is common knowledge in the gro- cery industry that Von’s and Shopping Bag have operated as one chain since the merger in March 1960. The two firms now have a single management; their warehousing facilities have been combined ; their advertising is consoli- dated; the search for a new location is now the responsi- bility of one organization instead of two; the inventory in the stores has been adjusted with the result that the stores of both firms now carry the same lines and the stores are known as ‘‘Von’s & Shopping Bag.’’ Se hSomiuat NA pint Soe Uae MRR ETS SERENE NAS pret NG 3 76 14. He would state that if this merger of Von’s and Shopping Bag is permitted, there will probably be sub- sequent mergers between and involving the other major chains, and in all likelihood it will develop that a few large grocery chains will dominate retail grocery distribution throughout the Los Angeles metropolitan area. This merger is a major stride in increasing the market share of the large chains and it will accentuate the large chains’ advantages over the small grocery. The merger of Von’s and Shopping Bag will have the effect of substantially les- sening competition and tending to create a monopoly in the sale of groceries and related products in the Los Angeles metropolitan area. [fol. 78] Testimony or Artie L. CARPENTER If subpoenaed to testify, Artie L. Carpenter would testify as follows: 1. He is the owner of Carpenter’s Market, 1712 West Main Street, Alhambra, California. He purchased this store in 1959. His store had gross sales of about $588,000, in 1961. 2. For ten years prior to opening his own store, he worked for Hiram’s Market, where he worked up from a clerk to store manager. Prior to his association with Hiram, he had worked in a grocery store in northern California. 3. In order to continue in business, a grocery retailer must keep well informed on every change in marketing con- ditions in the Los Angeles metropolitan area. He must be aware of all advertised grocery prices which his customers are apt to read. Therefore, he closely inspects all grocery advertising by the major chains as it appears in the metro- politan newspapers. He also regularly reviews grocery ad- vertising appearing in local papers. He subscribes to the Key Services and follows the prices of all of the major chains appearing in those booklets. In keeping abreast of the retail grocery trade generally, he regularly reads, among other publications, the ‘‘commercial Bulletin,’’ ‘‘Super Market Merchandising,’’ ‘‘Chain Store Age’’ and the ‘‘ Pro- [fol. 79] gressive Grocer.’’ 4. On the basis of his continued study of retail grocery 77 merchandising in the Los Angeles metropolitan area, the witness would testify that in the period since 1950 the uumber of single store grocery retailers operating in the that they confirm his own observations. He would state that this lessening in the number of independent grocers has been obvious to him as a result of his observations. 5. He would testify that single store operators cannot get into the more desirable shopping centers. It isa well-known fact in the industry that the major developers will not lease a shopping center location to anyone but a major chain. This is because only these chains have Triple A financial status and because the landlord wants the name of a big chain store in his shopping center as an attraction to other tenants. As a result single store operators do not have access to desirable locations in shopping centers. On the other hand, most of the new openings, particularly in the new shopping centers, have been made by the chains with Triple A financial status. 6. He has observed that the decline in the number of grocery stores in the area also arises from the increasing [fol. 80] size of supermarkets and their large, continually expanding dollar sales. The large supermarkets today Serve many more people than they did in the past. Asa result fewer grocery stores are needed in the area to serve a comparable number of people. 7. The witness would testify that single store operators serviced directly by railroad shippers at those warehouses, and operate large trucking facilities. As a result they are able to buy in heavy volume directly from the producer and deliver the product to their stores on their own trucks. This gives chains, such as Von’s and Shopping Bag, an advantage over independents and small chains in terms of inventory 8. He would also testify that he purchases from a co- operative group known as Orange Empire and this enables him to get certain of the advantages, such as quantity dis- 78 counts, enjoyed by the chains on dry grocery products. He would state that the cooperative does not carry such major products as dairy, meat and produce items. However, he would testify that large chains, such as Von’s and Shopping Bag, belong to cooperatives but have decreased [fol. 81] their purchases voluntarily when they developed their warehousing and distribution systems. Thus they have combined the advantages of the cooperative with direct pur- chasing and a highly developed distribution system. In ad- dition some of the chains, including Von’s and Shopping Bag, belong to a dairy cooperative named ‘‘Jersey Maid,”’ which gives them advantages over grocery stores which do not beleng to Jersey Maid. 9. He would also testify that on the basis of his continued study of the retail grocery industry in the Los Angeles metropolitan area, he is in agreement with the defendants’ exhibits showing that in the period between 1950 and 1958 the market share of the 8 largest chains in the area increased from 33.2 per cent to 39.0 per cent; the market share of the 9 largest chains increased from 34.3 per cent to 41.7 per cent; the market share of the 15 largest chains increased from 38.4 per cent to 50 per cent; and the market share of the 20 largest chains increased from 40.5 per cent to 54.4 per cent. When shown the tables prepared from the Bureau of Census reports by the Government economist, he would testify that these figures also corroborate his own under- standing, based upon his experience, of the trends in the area. He would further state that the strike in 1959 definitely had an adverse effect on the sales of the largest chains. [fol. 82] 10. He would state in his testimony that he ob- served the operations of Von’s and Shopping Bag prior to the merger. He would testify that both of these chains ad- vertised extensively on an area-wide basis, that they played a part in the competitive merchandising of groceries in the area, that they were profitable operations which had ex- perienced a history of successful growth and expansion. He would state that they were two of the largest chains in the area. 11. He would state that Von’s and Shopping Bag, along with Ralph’s, Safeway, Market Basket, Thriftimart, Alpha Beta, Mayfair and Food Giant, were among the leading firms in the area. 79 12. He would testify it is common knowledge in the grocery industry that Von’s and Shopping Bag have oper- ated as one chain since the merger in March 1960. The two firms now have a single management; their warehousing facilities have been combined; their advertising is con- solidated ; the search for a new location is now the respon- sibility of one organization instead of two; the inventory of the stores has been adjusted with the result that the stores of both firms now carry the same lines known as ‘‘Von’s & Shopping Bag.”’ 13. He would testify that he is aware of the recent state- ment by Mr. Theodore A. Von der Ahe, the president of [fol. 83] Von’s, that the competition which Von’s faces has not been ‘‘cut throat’? or ‘devastating’? and that there are no ‘intense price wars.’ He would testify, however, that he faces very vigorous competition from Von's. 14. He would also testify that there have been a number of acquisitions and consolidations in the retail grocery field since 1948. He would state that the merger between Von's and Shopping Bag was the largest consolidation of grocery chains in the Los Angeles area in recent years. 15. He would state that if this merger of Von's and Shop- ping Bag is permitted there will probably be subsequent mergers between and involving the other major chains, and in all likelihood it will develop that a few large grocery chains will dominate retail grocery distribution through- out the Los Angeles metropolitan area. This merger is a major strike in increasing the market share of the large chains and it will accentuate the large chains’ advantages over the small grocer. The merger of Von’s and Shopping Bag will have the effect of substantially lessening competi- tion and tending to create a monopoly in the sale of groceries and related products in the Los Angeles metropolitan area. and the stores are . BE aN ENE eNOS i Ng SECS MRE TIES RIN YY ny epee mance LE EECA NOLES LLL OLA ONE GETTER LI TG I 80 [fol. 84] Deposition or Artiz L. CarPENTER, taken on behalf of defendants, at 433 South Spring Street, Los An- geles, California, commencing at 2:00 P.M., Monday, April 15, 1963, before Harold M. Leibovitz, C.S.R., Notary Public, pursuant to subpoena and notice. Artie L. Carpenter, having been first duly sworn, deposed and testified as follows: Direct examination. By Mr. Alsup: Q. Mr. Carpenter, would you state your name and ad- dress, please. A. Artie L. Carpenter; my home address is 820 North Almansor. Q. What is the address of your store? A. 1712 West Main Street, Alhambra. Q. We have been furnished by the attorneys for the government with a statement as to what you would testify to if you were subpoenaed as a witness in this case. Do you have a copy of that statement in front of you? A. I do. Q. Have you read it recently? A. Yes. [fol. 85] Q. Did you read it carefully before you signed it? A. I did. * Do you recall when it was that you aid sign it? A. Not the exact date, no, sir. Q. Can you remember the month? A. Approximately three months ago. Q. It states that you purchased this store in Alhambra in 1959. . That’s true. Can you recall when in 1959? . Lleased the store in March of 759. You leased it in March? Yes. . Did you thereafter purchase it? _No. It isn’t my legal property, no. It is still leased. bOrO PO > 81 Q. So Paragraph 1 really means that you purchased a lease; is that correct? A. That’s true, sir. Q. I think this Paragraph 1 states that your gross sales in 1951 were about $588,000. Can you tell us what your gross sales were in 1962? A. Yes. $592,000. Q. What was your investment when you purchased this lease in 1959? [fol. 86] A. The lease purchase or the stock ?, Q. How much did you pay to get the lease? A. Well, we had a total investment of approximately $19,000 or $20,000. Q. Was that just for the lease or did that include some fixtures and merchandise? A. No, no, just for the lease. It was a signed lease with the last month’s rent paid in advance. Q. So the $18,000 really represented purchase of fixtures and inventory? A. Inventory, yes. That is capital that I had. That isn’t taking in the borrowed moneys. Q. That is you invested $18,000 of your own money. A. Of my own money. Q. Then you borrowed some additional money for in- ventory? A. That’s true. Q. Can you give us some idea of what the present net worth of your business is? A. Well, it is kind of hard to sum up. I would say prob- ably my net worth of the business is probably around 30,000. Q. $30,000? A. Yes. Q. Have higher estimates been made, do you know? [fol. 87] A. Yes. There would probably be higher esti- mates made. I am taking in consideration the depreciation of fixtures that I have depreciated down. Q. That is fixtures might have a greater net worth than they do for tax purposes; is that correct? A. They are worth more to me, sir, than they are to any- body else, yes. YR PEE EIU . 82 Q. Taking that in consideration can you gure us some idea of the present net worth of your business, the actual? A. Well, actual net worth, Mr. Alsup, it is pretty hard to say. I have been trying to borrow moneys on it. Nobody seems to think it is much. Q. Give me your best estimate, please. A. Roughly speaking I would say that 30,000 would take in our net worth. Q. Your father might have said it was $85,000—— A. Well, he might say $85,000, $100,000, or what. I ‘wouldn't say that we were worth that kind of money, I mean to sell, to sell out. Now, this is something that might be worth—Like I say, things are worth more to me than if you go and try to borrow or make a loan. They look at your paper. Q. Did you remodel this store when you acquired it in 1959? A. Painted the inside. Q. This looks like an old Safeway store. Is it? {fol. 88] A. It’s an old Safeway store. Q. Did you acquire it from Safeway or from someone else? A. No, from an individual. Q. Had they acquired it from Safeway? A. I don’t know, Mr. Alsup, if they acquired it from them or not. Q. Do you compete with the Rite-By store at 2800 West Main? A. I hardly think so. That is a tiny, little store? . It’s a small store, yes, on the south side. Have you been in it? . Lhave been in there a couple of times, yes. _ And that is, oh, roughly 11 blocks from your store, a little over a mile? A. I would say approximately a mile, yes. Q. Are you closer to that Rite-By Store than you are to the Von’s Store on West Main Street? A. No, I am closer to Von’s. Q. Are you? A. I believe so. Q. Are you closer to Ralphs than you are to Von’s? © ProOro 83 A. I am about a block’s difference, yes, a short block. [fol. 89] Q. Ralphs is closer to you by one block than the Von's Store; is that right? A. It is closer to me by one block, yes. Q. Do you compete with a Star Market there at 2289 West Main? A. Well, I feel the store has their customers and I have mine. It would be kind of hard to Say as to what type of competition we actually have with each other. I have a somewhat different type operation than Star ‘Market. Naturally I guess everyone thinks their merchandise is better, but I don’t think there is a great deal of competition between the Star Market and myself. Q. Have you been in the Star Market? A. Yes. Not real recently but I have been in there. Q. I have been in your store, Mr. Carpenter, and I must compliment you upon the attractive display and the cleanli- ness. What was your impression of the Star Market there at 2289 West Main? A. Well, it is Jast another market. Q. Do you feel that they have their merchandise as at- tractively displayed as you do? A. No. I think I am the greatest merchandiser there is if I have the time to do it. Q. Do you feel that the Star Market is a clean type of market that would attract customers that would be at- [fol. 90] tracted to your market? A. I think the personnel in the Star Market certainly feel that they have a duty toward their customers. I think that they try, yes. Q. How does their equipment compare with yours? A. My equipment is newer, yes. Q. Your displays are better, aren’t they? A. Well, I haven’t been in the Star lately, Mr. Alsup. It actually has been, I would say, a year since I have been in the Star Market. I couldn’t truthfully say what type of merchandising that they are doing right now. Q. Is that closer to you than this Ralphs Market that we have mentioned? A. Yes, it is closer. Q. Then it is closer to you than the Von’s Market we mentioned? abn. BA Rees og eo oun _ By Sparen, PAIS ANREP IES HORE ER RE FARE EE S4 A. I believe it is, yes. Naturally it is. Q. How far did you say you felt the Von’s Market was from you? A. In distance of blocks? Q. Yes. A. Oh, I think three-quarters of a mile would just about pace it off. Q. Was that Von’s Market there when you acquired your store in 1959? [fol. 91] A. No. Q. When was it built? A. Igayas opened April 15th of last year. Q. Was the Ralphs Market there when you bought your store in 1959? A. Yes. Q. The existence of the Ralphs Store didn’t discourage you from taking this market, I take it. A. I was quite a bit younger then. Four years, you know, you put a lot of experience under your belt. Q. What other stores in the area do you compete with, Mr. Carpenter? . I compete with Safeway. Where is the Safeway Store located? On Commonwealth and Atlantic. How far away is that? . By distance approximately three-quarters of a mile. Any other stores in the area you compete with? . Well, there is Gertmenian’s Market across from Safe- way. There again I don’t feel that I am competing too much with Gertmenian’s Market. Q. Why is that? A. They are altogether more or less a different type of operation. They are produce dealers in effect, a lower grade of produce from what I carry. {fol. 92] Q. They do carry a line of groceries there at Gertmenian’s place? A. Oh, yes. Q. Mr. Gertmenian just bought that market recently, didn’t he? Wasn’t it known as the Commonwealth Market? A. It was known as the Commonwealth Market, yes. Q. And Mr. Gertmenian bought it despite the fact that bOPOPO > 85 it was directly across the street from a newer and larger Safeway? A. Well, he bought it when Safeway was there, yes. Q. You have named Safeway, Ralphs, Gertmenian ’s, Star and Rite-By. You testified that you felt you don’t com- pete very much with Rite-By and Gertmenian. I gather that the reason you feel you are not in competition with Gertmenian is because they carry a poorer grade of pro- duce; is that correct? A. Well, yes, I feel that way. I think they are merchandis- ers in their own field, doing that type of merchandising. Q. You feel that you attract a better class of customers? A. I feel that I do, yes. Q. Are there any other markets in your area that you compete with? A. Well, we feel that we have competition on Valley (fol. 93] Boulevard. The distances aren’t too great from us and I am sure that you are going to ask about our new Uni- mart that is down below me. Q. What stores on Valley Boulevard do you compete with? A. We have Shopping Bag on Valley Boulevard. Q. How far away is that? A. I would say approximately a mile in distance. Q. Any others? A. Anything outside of that circumference it would be hard tosay, Mr. Alsup. I have customers from Temple City, people driving by and stop and see me. But I don’t think any further distance than that that I could say. Q. Give us some estimate of the percentage of customers that you draw from this mile radius that you have referred to. A. The percentage of my customers? Q. Yes. A. Well, 98 per cent. Q. From this mile radius? A. Yes. Q What is the size of your market, Mr. Carpenter? A. The over-all building is 6,000 square feet. Q. How much of that is devoted to store or selling area? [fol. 94] A. Approximately 4300. “OTIRS SADR S CHAE CRE RENE SAR 2 I Sr oe Re on Ce ar anes can mee aa catee 86 Q. You mentioned Unimart. Would you tell us about that? A. Well, so far we are happy. I mean I haven't got it. Q. Unimart has just opened and how far away would you say that is from you? A. Oh, six blocks. Q. On the same side of Main Street? A. It is the same side, yes. Q. And that contains a large supermarket in it, does it? A. In its field of supermarketing, yes, it has groceries there. Q. That is run by Food Giant, isn't it, that supermarket? A. Yes, | understand that, Q. Would you tell us why so far you are happy about Unimart opening in your areat A. They didn't hurt me like Von's did when they opened, Q. Did they help yout A. Thaven't had an increase but I haven't had a decrease. . Do you feel that it might help yout [fol. 95] A. That is a tough one. Naturally everybody likes to hope for the best, Mr. Alsup, but T can't depend on them to try to help me, no. 1 will have to——~ Q. You once told me that it might help you, didn’t yout A. I might have when I talked to you over the phone, I might have said that, Mr. Alsup. Q. Is that because’ a large discount house of this type attracts people into a neighborhood and you will get your share of the business? A. We kind of felt that maybe that might happen, yes. Q. In Paragraph 3 of your statement, Mr, Carpenter, you say that you must be kept well informed on every change in marketing conditions in the Los Angeles metropolitan area, Can you tell us what changes you have observed in the marketing conditions since you have been doing busi- ness in this area? A. Well, there has been a considerable amount of changes, Mr. Alsup. I just don’t know any one certain thing that I would be able to make you happy on. It actually leads back to approximately a year ago when we came into what is called the no limit law. We had to change our different methods of merchandis- ing in our stores at that time, We tried to stick by the TATE BERT EIRENE tyre ar pk os teem meee meek in ores WEN PP Sea 87 law. We feel that it is a rather decent law not to sell below [fol. 96] cost. And, of course, prior to this we were doing our own thinking, I mean having the right to limit to our customers in a decent amount. We had to change up our advertising a lot. We found that we came in and cut the prices in a lot of our staple items, and this was merely fol- lowing the changed ideas and which probably represents 25 per cent of our gross sales going through the doors. Our net percentages in our business hasn’t been hurt, we have got ourselves adjusted. But we are not able to use & weapon, at least we are now, we don't dare to advertise an item ten cents below our cost in order to maybe create a little more traffic into our stores. We found that most people have been abiding fairly well to this law. There are some instances I have seen prices a little lower, Maybe they got a little better buy on it than I did. But we haven't been able ourselves to create more advertising on our own part. I think that everyone in the grocery business realizes that they are only allowed a certain per cent of their gross sales for advertising and we do try. Q. How do you advertise? A. We use the Alhambra Free Press. It’s a weekly paper. Q. They use throw-aways? A. This is supposed to be a paid circulation. It first was a throw-away but it is more or less pay if you want [fol. 97] to pay. It isn't as effective as your mailers or your big metropolitan newspapers or your big city news- papers, Q. Do you use mailers? A. No, sir, I don't. Q. What other changes have you seen in the recent years? Would you consider the discount houses a change in the marketing condition? A. Well, we have had diseount houses for as long as I can remember, Mr. Alsup, and there |: .sn't been as many. It seems to more or less be in a experimenial age right now as to whether they are roing to really be something or not. I think they are here to stay, Some might turn into bowl- ing alleys, who knows. But some of them will be here, 1 have seen some of them that are very successful in their operations, GAS RMAC oee See ge Te ares erg SSI tuts WNT HS se: as SERGE DAI TEES: 88 Q. There has been quite a rash of them in the last two or three years all over the area, hasn’t there? A. Well, Southern California is a real competitive area. I think we are all aware of that. Q. How about bantam stores, has that been a change in marketing conditions in recent years? A. Well, I am not too awfully familiar with the bantam operations. I do know that a couple of them have gotten in some serious trouble, or at least from what I have read in the Commercial Bulletin. It has been taken over [fol. 98] by someone else. As to the amount of business that they are doing right now, I really don’t know. Q. Do you know how many of them have entered the area in the last five years? A. In our own immediate area there hasn’t, to my knowl- edge, been any. I have seen them in my drives, I mean from here to, say, Long Beach. I have seen the Speedee Marts in some of the small areas. Q. I gather you are primarily interested in your business in your own immediate area over in Alhambra; isn’t that correct? A. Well, naturally my biggest interest, Mr. Alsup, is with me in my area. Of course, as a whole we have our future to look out for too. Q. That is for sure. In these various trade papers that you have read, and you mentioned Commercial Bulletin and Super Market Merchandising—That is really Super Market News, isn’t it? A. Well, Super Market News, yes. Q. And Chain Store Age and Progressive Grocer. Have you seen articles in recent months by so-called experts that the discount house will put the supermarkets out of busi- ness? A. I am sorry to say I haven’t read that article yet. I don’t think it will ever put us out of business. Not the discount houses, no. I didn’t read that article, though, [fol. 99] Mr. Alsup. Q. In Paragraph 4, Mr. Carpenter, you refer to your con- tinued study of retail grocery merchandising in the Los Angeles metropolitan area. You state that you would testify that in the period since 1950 the number of single 89 store grocery retailers operating in the area declined. Have you made any actual study yourself along that line? A. Mr. Alsup, I have seen a few of the markets closed up and, of course, with the co-op there has been—maybe this is one reason that we are having such a tough time right now trying to get financing, because a lot of them have fell by the way in the last year or so, in the last couple of years. I am sure that probably we could come up with quite a few. Q. You haven’t made any study yourself? A. I haven’t went out, no. I am afraid I don’t have the time to do that. Q. You haven’t made any study in Orange County, I gather? A. No. I am not in the Orange County area. Q. Have you seen some failures of some of the larger chains during the last couple of years? A. Well, seen them, yes. In certain respects I have seen them taken over by other chain markets. I imagine that they were in some sort of financial difficulty. [fol. 100] Q. From your study of the trade papers you know, don’t you, that Fox Markets went into bankruptcy? A. Yes, I saw that in big black letters. That was in the newspaper and also in our trade magazines. Q. And based on your experience in the industry would you say that has contributed somewhat to the tightening of credit? A. That might contribute to some of it, yes. : Q. From your study of the trade papers did you observe whether in 1951 McDaniels went into bankruptcy? A. Yes. Q. And before it did that it sold off a number of its stores to single store operators, did it not? A. I believe that to be correct, yes Q. And Food Fair, which is one of the nation’s largest national chains, has taken over the remaining Fox Stores; isn’t that correct? A. I believe that is all settled now. I don’t know. To my knowledge it is, yes. Q. But prior to that a number of the Fox Stores were sold off to varions smaller chains and individuals, were they not? . wo A. I don’t know of any of them personally, Mr. Alsup. I do know a couple of the MeDaniel’s stores, but not Fox Markets, I don't know. I know they had taken over the Lowa [fol. 101] Pork Shop Markets, and it might have been that the lowa Pork Shop Markets might have been taken over by some individuals, But | don't know if any of the Fox Markets themselves, Q. What about Yor-Way, what do you know about that situation? A. They folded up. Q. Went into bankrupteyt A. Yes, | imagine they were in bankruptey. Q. According to your studies of these trade papers, Mr. Carpenter, wasn't it generally considered that these three chains got into financial difficulties because they expanded too rapidly with inadequate capital? A. L hadn't seen a now Yor-Way Market in I don’t know when. Naturally we seen a lot of the Fox Markets. As to why they folded, 1 imagine that in the ox case it could have been overexpansion, yes. In the Yor-Way | couldn't Say. Q. You didn’t see anything about it in this various read. ing that you have done in the trade papers? A. L have read about the Yor-Way Markets. Of course, the Yor-Way Markets had never beon—I was never too particularly interested in them, | never felt toward them as any type of competition, either, not the Yor-Ways. Q. In this same period that you refer to in this [fol. 102) Paragraph 4 have you known of others like yourself who have started in business with one store and been able to stay in business? A. Yes, I know of people that are still in business, yes. Q. Do you know some who have started in this period beside yourself? A. 1 know of one of other person, yes. Q. One othert A. Yes. On Valley Boulevard. Q. Who is that? A. Bob Sorenson's Market on Valley Boulevard. Q. In your readings of the trade papers have you read at all of Ted Wood and his Pantry Marketst A. Yes. I wonder where he is getting all of his money. Maybe he is a good merchandiser, CARELESS OLED GEN SEO te 9 cc pet fe a SA LC tal he cna A 91 Q. Now will you answer the question? A. Yes, 1 have read about Ted Wood, Q. Didn't he get started sometime in about 19541 A. 1 thought it was sometime before that, but I paid particular attention to him within the last three or four years, Q. He started with one market, didn’t het A. I believe that's correct, yes, Q. Do you know how large his chain is nowt [fol. WW8]) A. He has probably 10 stores now. Q. In your readings of the trade papers have you read about Joe Goodnight of Michael's Markets? A. Yes, Q. What have you read? A. Joe does a good job. Q. Did he leave Alpha Beta in 1958 and start his own business? A. I believe it was around there. Q. What has happened. How many stores does he now have, do you know? A. I don't know what number of stores he has. Q. Do you have any ideat A. I might be thinking of someone else, but I thought he had four stores. 1 don’t know. Q. Do you recall reading in the (rade papers or from your study of the industry about how Joe Hughes got started in 1952? A. Yes, Q. Did he start with a one-store operation? A. He had one store, yes. Q. Do you know how many stores Hughes Market has now? A. They have eight or ten stores. They have several on the drawing boards, | imagine from what I have seen. [fol. 104] Q. Do you know Jerry Fleishman, one of the government witnesses f A. Jerry Flashmant Q. Fleishman. A. No. Q. Do you know the witness who testified this morning, Mr. Don Fairbank? A. T don't know him personally, no. Q. T imagine if vou counted you could think of a number of others who have been able to start in this period since you have become familiar with the grocery business in this area, couldn’t you? A. Yes, I have known of a few that have started back in the fifties. Q. And they have been successful, so far as you know? A. The few that I know of, yes. They appear to be. Q. Are you acquainted with the two young men who purchased Mr. Irvine's market in E11 Monte and now call it the Crower’s Market? A. I don’t know them, no. I didn’t even know it was Irvine’s Market. Q. Do you know whether they have a successful opera- tion? A. It just seems to be. Q. Do you know of your own knowledge whether there {fol. 105] are actually more or fewer grocery concerns doing business in this area now than there were in 19501 A. I would say, Mr. Alsup, yes, there is fewer. Q. Do you have any idea how many fewer? A. I don’t know the amount, no, the few amount. Q. And what has been your impression as to size of these markets that you have observed that have gone out of busi- ness? Are they what you would call mom and pop’s pri- marily? A. No. I have seen a few 10,000 square foot markets that are not in operation now. Q. I have seen a larger one with the MeDaniel sign on it, a for lease sign on it on the San Bernardino Freeway. Have you ever noticed that? A. Yes, I believe T have. Q. In Paragraph 5 you refer to shopping centers, the difficulty that a single store operator or the inability of a single store operator to get into the shopping centers. What effort have you made to get into a shopping center? A. Well, T have never had a chance to get into one. T have tried t omake studies as to what I might be able to do to get into one. Naturally no one is going to go out and say, “Hey, I've got a shopping center.” But you see them spring up and it’s all ent and dried before they go, T guess. [fol. 106] Q. What effort have you made io get in? A. My own particular self? Q. Yes. — me SEPA RRS 93 A. Well, I haven’t made any. Q. In these studies that you have made of the shopping center problem have you become aware of the bills which have been pending in Congress for the past two or three years which are designed to help small businesses get into shopping centers? A. Yes, I have read about it. Q. Are you aware of the fact that Ted von der Ahe says he believes such legislation should be enacted? A. No, I wasn’t aware of his statement on that, no. Q. Do you believe if such legislation were enacted by Congress that it would be of help to you smaller business- men? A. It could be, I guess, yes. Q. How can breaking up the merger of Von’s and Shop- ping Bag help you on this shopping center problem? A. It might lessen the encouragement of other mergers, Mr. Alsup. Q. Whey you say that it night, you are speculating? A. No, I am not speculating, no. Q. What is the basis for your statement? A. We naturally have concern about it. In all truth [fol. 107] we know that definitely it has lessened in com- petition worked by this merger and we feel that what would prevent the other larger chains of all merging together. Q. You say you notice it has lessened competition, this merger? A. Well, certainly it has lessened competition between Von’s and Shopping Bag, Q. What study have you made as to competition which existed between Von's and Shopping Bag before the merger? A. Well, they were definitely in competition with each other. Q. In how many places? A. Well, in my own city they were in competition with each other. There was Von’s and Shopping Bag in Al- hambra. Q. Would you say that competition generally in the area has been lessened? A. They have a rather large area to cover. I would think that in general, yes, it would. Seen Mla sce ate PREMIO EEN BELITTLE ON ERE UE TS ABATE SWE i a a Ne RN a 94 Q. Throughout the Los Angeles metropolitan area, con- sisting of Los Angeles and Orange Counties? A. I would say, yes, it would. Q. On the basis of overlap between Von’s and Shopping Bag stores? A. They do have a few stores that overlap. I don’t know the distance of draw that our markets have nowadays. [fol. 108] Maybe it isn’t as great as it used to be, but they still have a drawing power ef four and five miles. Q. What is the basis for that statement, Mr. Carpenter? A. We are speaking of our competition between he two markets, Mr. Alsup. Naturally when they merged together there is no competition between them, regardless of whether they overlap or don’t overlap. Q. You referred to a four or five mile draw area of a Von’s or Shopping Bag Store. What was the basis for that statement! A. Well, the basis of it would be primarily to the shop- ping centers, the markets that are in the shopping centers. Q. Have you made any study of any draw area of any Shopping Bag store? A. Well, Von’s says, Shop at Von’s Markets.” In Alhambra it certainly draws some of my customers into that area. Q. You said that was less than a mile away. A. No, not the one on Valley Boulevard. Q. You said that was less than two miles away. A. No, I don’t believe I stated the distance between my store and the Valley Boulevard shopping center. Q. And it’s on the basis of that that you say that Von’s and Shopping Bag Stores have a draw area of four to [fol. 109] five miles? A. Yes. Q. Nothing else? A. No, I don’t think so. Q. I think you said, “We know competition has been lessened.” How do you reconcile that with your statement in Paragraph 13 that you would testify you face very vigorous competition from Von’st A. Well, speaking of Von’s, naturally we are speaking of Von’s and Shopping Bag. Q. And you face vigorous competition from both of them? eave yO WoL “ ny are av Aik, ie » wwiay ‘ SPAN Nga il i SUPREME TA CAEN 8 Osim tne oe neg et ” ras m ry 95 A. Why, certainly. Q. I am a little puzzled now, Mr. Carpenter. In view of that I would like you te tell me how competition lias been lessened generally in the Los Angeles metropolitan area, consisting of Orange County and Los Angeles County, by this merger of Von’s and Shopping Bag. It hasn’t lessened the competition with you. A. You mean my competition hasn’t lessened, which it hasn’t. Q. Right. A. That’s true, it hasn’t lessened it. Q. So the most then that you mean is that competition which might have existed between the particular Von’s and [fol. 110] and Shopping Bag Stores no longer exists; is that correct? A. Why, yes. Q. I would still like to get you to explain to me how the merger of Von’s and Shopping Bag would change the shopping center situation. Shopping Bag could get into the shopping centers before the merger, couldn’t it? Yes, I am sure they did, yes, that’s true. Q. And Von’s could and did before the merger? A. That’s true. Q. Please explain to me how this merger of Von’s and Shopping Bag that we are talking about here changed the shopping center situation. A. I don’t think T put any particular emphasis that it would change the shopping center aspect any. I don’t think they will ever be changed anyway. Q. You don’t have much confidence in Congress passing these bills, I take it. A. Maybe not. Q. Now, if the merger of Von’s and Shopping Bag were broken up wouldn’t you have one more concern competing for a shopping center site? A. T don’t really think so, Mr. Alsup. I don’t really see how that would have any bearing on the case, I mean if it was split up. As far as me getting into a shopping center, if they were to split up or stayed whole, I don’t think that (fol. 111] this might make any difference in my own par- ticular self. Q. Can you think of anyone it would make a difference ? 96 A. Yes. I think it could probably make a lot of differ- ence. [am sure that in my own self if I was building a shopping center that I would probably rather have Von’s and Shopping Bag in it than | would Carpenter’s or some- body else. Q. If you were building a shopping center prior to the merger you would rather have had a Shopping Bag in it ihen a Carpenter’s; isn’t that right? A. The answer was that I would flip a coin as to whether it would be Von's or Shopping Bag if I were the one that was building it. Q. But in either case you would choose one or the other rather than a Carpenter’s. A. Yes, I would. Q. And that would be true if you were a shopping cen- ter developer with respect to any chain with a Triple A financial credit rating, wouldn’t it? A. Well, that is true enough as far as Triple A credit references. It doesn’t necessarily mean that it’s the name, the draw power that either one of these stores do have over and above maybe someone else. Q. You say in Paragraph 7 that you would testify [fol. 112] that single store operators and small chains do not have their own highly developed distribution system. I ask you, does a single store operator need a highly devel- oped distribution system? A. I don’t think a single store would. I don’t know how he could upkeep it. No, that’s true. Q. You are a member of Orange Empire, are you not? A. Yes. Q. Does Orange Empire have a highly developed distri- bution system? A. Yes, they do. Q. Do you know whether or not it does a greater volume in sales to its members than Certified Grocers of California? A. Well, they are the two biggest. I would say that it would be the last year that Orange Empire did have a larger distribution than Certified. But they are in three states. Q. And would you say that Orange Empire is your dis- tribution system except for milk and meats and produce A. Yes. Q. And it operates large warehouses, does it not? 97 A. True. Q. And it is serviced directly at its warehouses by rail- road shippers, is it not? A. That’s true. [fol. 113] Q. And it operates large trucking facilities, does it not? A. True. Q. Its warehouses and its trucking facilities are larger than those of Von’s, are they not? A. Yes, I imagine so. Q. Would you read the last sentence of Paragraph 7, Mr. Carpenter, and tell me how Von’s and Shopping Bag have an advantage over you in terms of inventory control? A. Because of owning their own warehouses they have control—better control over their inventory by distributing it to the stores themselves. Q. Better than Orange Empire ean do it for yout A. Well, if we are speaking of Orange Empire and their inventory control, I would say that Orange Empire had an inventory control also. But as to how Orange Empire is going to know how much their members are going to buy, we have a lot of outs too on our orders. Whereas in larger chains operating their own warehouse they can have fewer outs, fewer shortages. Orange Empire can’t know. All they can do is go by their past records as to how much their members are going to buy from them. Q. Isn’t that basically what a chain like Von’s must do on the basis of what its stores are going to sell? A. Well, certainly that’s true. [fol. 114) Q. I have heard it said that if a single store operator doesn’t have absolute inventory control he cer- tainly doesn’t belong in the business. Would you agree with that? A. Well, you have to have a certain amount of inventory control, true. I couldn’t say how long it’s going to take them to put themselves out of business by not having inven- tory control. If we lost fewer members we might have less control over our inventory. We might have more shortages, Q. This is in the realm of speculation now, isn’t it, Mr. Carpenter? That same thing might happen to any of the larger chains, couldn’t it? A. Well, in our speculations, true. But we have to say PARR Sie ye not ET RRR RMN RELI ic SN ema OND RE 98 more probably it would be the smaller—than it would be the smaller ones. Q. Don’t you have absolute control of your own inven- tory in your market? A. To a certain degree only, yes. Q. Would you explain? A. Well, in our buying, I mean we would like maybe to have 25 ca.es or 50 cases of giant size Tide five cents off or ten cents off. This type of merchandise we have never been able to get ahold of because it has already been taken up. Now, in inventory control there has been times that we have had to take merchandise that wasn’t off label and so consequently we have had merchandise on hand consid- [fol. 115] erably longer than what we should have had it on hand. I mean in the emphasis of turning merchandise over. Q. Are you testifying that that doesn’t happen to the larger chains, Mr. Carpenter? A. They can sure as heck—It certainly wouldn’t if it is coming direct from the plant itself. If you are running something on the ad they would either see that restitution was made or they are going to get the right merchandise. Q. How did the merger help Ven’s in this respect? A. How wouid it help them? Q. How did it? A. Well, it certainly wouid have increased their buying power. They merged together their warehousing facilities. Q. You say it increased their buying power. Isn’t it true that once you get to a certain level, buying in carload lots, there is no additional discount for additional quantity? A. That has been the impression that I have had, yes. Q. And if it were otherwise wouldn’t Orange Empire and Certified Grocers have far greater buying power than Von’s or any of the other chains in this area? A. Well, that is somewhat debatable too, in getting [fol. 116] right back to off merchandise. From what I hear, from the complaints that I have registered with my own co-op in off merchandise, they tell me that they are only allotted a certain amount, which is usually always taken up even by chain members that belong to the co-op. They seem to have their orders in there waiting for it. Q. Have you investigated the relative merits of Certified Grocers versus Orange Empire in that respect? SANE pec ete re Tire me I kn ean . OPES PRICES RS a LEST OT REI 8 cpt mr oy / gy sommes : sian EE ES EGER GEREN REDE 99 A. Not to a major degree, no. I don’t know as they—— Q. To what degree? A. You mean are they out trying to gather up more members? Q. No. Which one can render better service in that respect to its members? A. Oh, I think that the service between both of them, I couldn’t say that one was any better than the other. Q. Have you made a study? A. Yes. I have talked with the people that are with Certified. In fact when I was with the Hiram organization we bought through Certified. So I have some experience with their service that they gave us when I was with them. Q. On the basis of your study of the industry over the past ten or twelve years would you say that Certified Grocers has grown enormously, both in number of retail members and in volume of business it does? [fol. 117] A. The growth that they have had in the last couple of years, they have certainly grown all right. In the last couple of years I don’t know as to the extent of their growth. Q. How about Orange Empire? A. Well, I would say that they have been about the same for the last year. Q. Do you have any idea what Orange Empire was doing in annual volume in 1950, roughly? A. Yes. It’s considerably more now, Mr. Alsup. Q. Would you give us the figures, roughly? A. Roughly over five million more than they were doing then. Q. Roughly Orange Empire is only five million more a year than—— A. In 1950? Q. —than in 1950? A. No, it is much more than that. I don’t know the exact figure, though. Q. Would it be as much as one hundred million more? A. I don’t think so. Q. Do you have any idea about the relative gross sales of Certified Grocers to its retail members in 1950 as com- pared to 1952? A. Certified to its members? [fol. 118] Q. Yes. 100 A. How much more now than it was in 1950? Q. Yes. A. It is well in the millions, yes. Q. Many millions? A. Quite a few. Q. I gather from your Paragraph 8 that you feel with your quantity discounts you get your dry grocery products on your shelves just as cheaply as any of the direct buying chains; is that correct? A. No, I don’t think so, Mr. Alsup. We can pick up, if we had facilities to pick up, from Del Monte, we could gross another three per cent or one per cent. In taking any direct shipments of large quantities we could make another per cent. Q. On dry groceries? A. In the dry groceries, yes. And sugar is the same way, and flour. Staple items you can still, if it isn’t shipped to the warehouses, if it is brought direct from the manufac- turers or from their warehouse, you can save. Q. Von’s in running a warehouse certainly has some warehousing’ cost, doesn’t it, Mr. Carpenter? A. I am sure they do, yes. Q. Do you have any idea if you made any study to deter- mine how the Von’s warehousing cost compares to those of [fol. 119] Orange Empire or Certified Grocers? A. It definitely would be less. Q. What is the basis for that statement? A. Well, it wouldn’t be very natural for them to operate warehouses unless it was to their advantage, Mr. Alsup. Q. Here again you are speculating? A. It is my own thought, yes. (A short recess was taken.) Mr. Alsup: Q. Where do you buy your meat, Mr. Car- penter? A. The bulk of my buying is from E. B. Manning & Son. Q. That is generally considered a quality house? A. Yes, it is. Q. Do you do the buying? A. No. A brother of mine does the buying. Q. Has he had prior experience in the meat buying busi- ness? A. Well, he has had the experience since we have been in business, yes. 101 Q. Have you made any study to determine whether or not you get quality meat comparable to that of any of the chains? A. Yes, we get quality meat. Q. Have you made any study to determine whether or not you get your meat at comparable prices on quality? [fol. 120] A. We pay a premium price for Manning’s meat. Q. That is because you choose to buy the premium meats? A. We buy for the name, yes. Q. But assuming the chain buying comparable quality, you would get it at the same price as a chain; isn’t that right? A. I hardly think so, Mr. Alsup. Q. Do you know? A. Well, I have bought choice meats for half a cent a pound cheaper than I have paid for Manning’s. And if I could buy tinned beef I could save myself maybe two cents a pound or maybe a cent and a half a pound. This again is on volume buying. Q. Does it sometimes happen, or do you know that a single store operator such as yourself can do the packer a favor by picking up a small quantity that a chain couldn’t handle and get a better price? A. If you were able to make the trip yourself and pick it up, yes, you would be saving the packer. Q. And some of the single store operators do just that, don’t they? A. I don’t know of any personally. I mean myself I don’t know. There might be, but I don’t know. Q. Who does your produce buying? [fol. 121] A. We have a fellow, a Mr. Tom Cavalier, he does my produce buying. He has five other accounts besides myself. Q. I gather from your earlier statement about Mr. Gert- menian you feature higher quality produce; is that correct? A. We are limited to space so we carry the best, y [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0265%3A01. Public record. Not legal advice.