# Appendix — United States v. General Dynamics Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0099%3A04 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1974 - **Citation:** 415 U.S. 486 ## Text FILED APPENDIX - OCT 10 Is73 Sng Gt oh Mth aes Octoser Term, 1973. No. 72-402 ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS niet -yobnasta herentwmrom dos mee Oe eee a et tae Se ee eee 1 rent ne re og a a NTT SET Corporation 1 5 6— Annual Report of General Dynamics Corporation 1965 ee ee 24— Chart entitled “The United Electric Coal Com- : panies Fixed Assets, Long Term Indebtedness, Working Capital and Net Assets or Stockholders Equity 1940 to 1967” ii Gx Gx Gx RRR RR RR Gx Gx Gx INDEX 25— Chart entitled “The United Electric Coal Com- 35— City, Water, Light & Power (Springfield) letter to nations by District of Origin, ssa ng to 1967" ____ 54— Freeman Coal Mining Corporation; Shipments of Coal in Tons from the Crown Mine to Customer Mining Corporation; Shipments of Coal in Tons from the Orient No. 8 Mine to Cus- tomer Destinations, 1967 12 18 2&8838 68 & GX 656— Freeman Coal : of Coal in Tons from the Orient No. 4 Mine to Cus- tomer 1967 75 GX 57— Freeman Coal $ of 76 Customer Gx 60— The United Electric Coal Companies; Shipments ‘ GX 61— Chart entitled “Total Coal Consumption in Tons i i i Gx 62— Chart entitled “Production of Coal in Illinois by the Leading Companies and Their Subsidiaries for the 1957 Calendar Year” 81 Gx 63— Chart entitled “Production of Coal in Illinois by the Leading Companies and Their Subsidiaries for the 1958 Calendar Year” 82 Gx 64— Chart entitled “Production of Coal in Illinois by the Companies and Their Subsidiaries for the 1959 Calendar : 83 Gx 65— Chart entitled “Production of Coal in Illinois by the Leading Companies and Their Subsidiaries for the 1960 Calendar Y : 84 GX 66— Chart entitled “Production of Coal in Illinois the Leading Companies and Their Subsidiaries for the 1961 Calendar Year” 85 Gx 67— Chart entitled “Production of Coal in Illinois by 2 the Leading Companies and Their Subsidiaries for the 1962 Calendar Year” xt RB Gx 68— Chart entitled “Production of Coal in Mlinois by the Leading Companies and Their Subsidiaries ri for the 1968 Calendar Y : 87 Gx 69— Chart entitled “Production of Coal in Minois by the Leading Companies and Their Subsidiaries for the 1964 Calendar Year” __ Bhs Ce 88 Gx 70— Chart entitled “Production of Coal in Minois by the Leading Companies and Their Subsidiaries for the 1965 Calendar Year” 89 Gx Gx Gx Gx Gx ; ee 4 i 3 fe bi 3 i : ' i $3e\ 2 if f i : f i (3 : | ! ea | [3 f : | ! T 7 : F F | | f =} ue ty is i : “4 91 107 111 114 117 118 to Department of Justice dated October 20, 1966. GX 135— March 26, 1970 Petition of Commonwealth Edison RE gee Ee EO” y S Barron’s, October 18, 1969 189 GX 253— Article entitled “Nuclear Power Economics,” 1968- 1969 Report by Philip Sporn to the Joint Con- gressional Committee on Atomic Energy, re- printed in CCH { 8043 ise _/ Defense Exhibits DX 1— October 9, 1957 memorandum from Frank Kolbe to R. J. Hepburn re punch mining 197 DX 2— October 18, 1957 letter from J. M. Morris to Frank Kolbe re Northern States Power Company, Displacing gas with coal 198 DX 3— June 19, 1958 letter from A. J. Christiansen to A. H. Truax with three page attachment... ==s-—:199 DX 4— July 1, 1958 letter from J. M. Morris to Frank Nugent 204 DX 5&— July 11, 1958 letter from R. J. Hepburn to Frank Kolbe with two page attachment 206 DX 6— August 4, 1958 letter from “President” to Mr. Justin Potter __ 209 DX 7— November 21, 1958 Wall Street Journal article “General Dynamics Seeks To Acquire Chicago INDEX Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx Dx DX Dx &—~ December 11, 1958 letter from Geo. Robert Boller to F. F. Kolbe with one page attachment. Pr eae + orga 1i— May 27, 1959 letter from R. J. Hepburn to F. F. 12— October 2, 1959 Paul Weir Co. report to F. F. 13— May 27, 1960 letter from T. H. Latimer to R. J. Hepburn 14— August 23, 1960 letter from J. M. Morris to C. Evans Parks, Iowa Southern Utilities Co. ___ — a. 1960 letter from J. M. Morris to sn Etiaidr teachin ae J. M. Morris 17— November 15, 1961 letter from J. M. Morris to H. L. Mann 18— June 12, 1962 memorandum from R. J. Hepburn to J. M. Morris re Preliminary Report Sunshine Coal Property, Centerville, Iowa 19— November 30, 1962 letter from H. L. Mann to Robert J. Hepburn 20— December 10, 1962 letter from Robert J. Hepburn to H. L. Mann re Iowa Coal Field ges | he wanan geod grays ommembergers in eo ok 1964 letter to Frank Nugent enclosing one page draft letter to Arch Kraakevik of Illinois Power Co. 23— June 16, 1964 memorandum from Irving Crown to Frank Nugent with four page attachment... ___ 24— June 29, 1965 memorandum from J. M. Morris to R. H. Inman et al. re Industry field _ 25— October 27, 1965 letter from J. M. Morris to Frank Nugent with one page attachment 26— January 5, 1966 letter from Q. W. Wellington to J. M. Morris 27— March 8, 1966 memorandum from Dale H. Emling to J. M. Morris with two page attachment 28— March 14, 1966 letter from J. M. Morris to Frank Nugent 29— July 13, 1966 memorandum from D. H. Emling to R. H. Inman 30— July 29, 1966 memorandum from R. H. Inman to T. H. Latimer, et al. 31— August 9, 1966 memorandum from D. H. Emling and B. C. Jensen to R. H. Inman re Star Lake Field, McKinley County, New Mexico => Page 212 214 215 216 PURSE EE . GREE Defense Exhibits :—Continued DX 82— September 12, 1966 letter from J. Morris to Frank Nugent DX 83— October 18, 1966 memorandum between R. H. In- man and T. H. Latimer DX 34— July 81, 1967 letter from Jack A. Simon to Frank Nugent DX 85— September 31, 1968 four-page coal contract be- Dx 36— September 5, 1969 letter from John Welsh, Cater- us g ty study DX 37— September 12, 1969 letter from John T. Cusack L. Hedlund 88— 1965 Annual Report Zeigler: Coke Company - Dx Dx Dx Dx Dx Dx E 3 Bu E : : B F [i f if | i reek fi heres P i i E : Dx DX 47— May 29, 1969 letter L. Coal DX 49a— Subpoena Questionnaire form and related court orders DX 49— Producer data exhibits, mine characteristics DX 50— Producer data exhibits, comparison of leading 533 ii t F | 3 SER PEGE E BBeE Ta producers with other producers 4ll DX 51— Producer data exhibits, coal characteristics by protneing. deteiets: 419 DX 52— Producer data exhibits, overburden of strip mines and depth of deep mines os 447 DX 53— Consumer data exhibits, boiler specifications 458 Dx 54— Consumer data exhibits, types of sales by produc- ing districts 461 DX 55— Consumer data exhibit, analysis of consumption and production of coal by freight rate districts__ 462 INDEX iat Dx DX 57— 1960 atility use of IMlinois coal . DX 59— Analysis of potential and actual use of fuels other :—Continued Dx IBN oss age nn & : cdi tram Long with attachment Dx pi age ee gen pete caper heen ape Dx 7:5 geeabie aid tons Wa eed aie i F received in evidence in FTC Dkt. 8765 in the matter of Kennecott Copper Corporation Cement Company to Hugo Sims Dx 80— Certified copy of respondent’s Exhibit No. 184A- 61 Dx Dx DX 83— Dx DX DX &— Dx Dx DX DX Dx Dx DX 93— Dx Dx Dx Dx Dx DX INDEX Defense Exhibits :—Continued Si 1968 Anmual Report of Standard OM Company (New Jersey) 82— Plaintiff's proposed findings of fact ba, Bb, 6b(2). 5d(4) and 5e(3), United States v. Standard Oil Company (New Jersey on et al.), Civ. No. 954-64, D. NJ. (1964) Plaintiff's Dynamics . 90— 1969 Annual Report of Commonwealth Edison ___ 91— Letter of January 17, 1969 from Preston Kava- nagh to Security 92— Letter of December 4; 1969 from Preston Kava- nagh to Security Analysts Commonwealth Edison: Profile of No. 1, Nucle- onics Week, April 4, 11, 18 (1968) 94— 1968 Annual Report of Commonwealth Edison 95— “Edison Seek A-site Downstate,” Chicago Daily News, March 9, 1970 96— Advertisement entitled “Nuclear Power for Chi- cago,” Chicago Daily News, March 13, 1967 97— Advertisement entitled “Commonwealth Edison Reports on Chicago’s Air Pollution Problem,” Chicago Sun Times, July 11, 1969 99— Advertisement entitled “No Smoke. No Dirt. No Fumes,” Chicago Tribune, February 8, 1970_ a. § Heep tied: : wrinti: z x - INDEX Defense Exhibits :+~—Continued DX 100— Advertisement entitled coiens OU thee ) DX 103— of Coal-Fired and Nuclear Power Plantsfor’the TVA System, June, 1966 DX 104— Letter of October 17, 1962 from Elmer Hill to Barton Gebhart DX 105— Letter of October 18, 1962 from Barton Gebhart to Elmer C. Hill with two page attachment DX 107— Central Station Nuclear Plants, AEC Division of Industrial Participation, March 30, 1970 DX 108— AEC Release N-2, January 13, 1970, re Status Report on U.S. Civilian Nuclear Power Plants __. DX 110— Chart entitled “U.S. Utility Orders for Electric Generating Equipment” ges ee ee ee, pores ees tenes A me eth gl Refining Company to John T. Cusack == DX 112— Excerpt from Minutes of Meeting of Board of Directors of General Dynamics Corporation on September 30, 1966 DX 113— Excerpts from the Minutes of the Board of Di- rectors of The United Electric Coal Companies 1959, May 18, 1960, July 15, 1960, 9, 1960, October 28, 1960, March 10, DX 114— Proxy statement of The United Electric Coal Companies 1954, 1955, 1956, 1957, 1958, 1959, 1960 DX 116— Nuclear Power Briefing For The Coal igo »- September 29-30, 1966. USAEC _ igi DX 138— 1969 Steam-Electrie Plant Factor 1022 1041 1042 1085 1086 1087 INDEX Areas” . DX 145— Map entitled “Service Area, Dairyland Power Cooperative” DX 146— 1966 Annual Report, Union Electric Company __ DX 147— 1967 Annual Report, Union Electric Company __ DX 148— 1968 Annual Report, Union Electric Company __ Dx 149— Tne gen pre Sap, arrearage DX 150~ “Fuels and Fuel Transport for Electric Energy,” DX 144— Map entitled “Investor-Owned Electric Utility | Service : “Chicago's Peril,” Chicago Sun Times, October 19, 1967_ DX 152— Article entitled “Antipollution, Antitrust Bills Are Signed by Gov. Ogilvie,” Chicago Sun Times, June 26, 1969 DX 153— Article entitled “Crackdown on Air Pollution!” Chicago Sun Times, July 14, 1969 DX 154— Article entitled “Edison Cuts Use Of Coal, Re- duces Air Pollution,” Chicago Sun Times, Novem- ber 11, 1969 ‘DX 155— Article entitled “8 Utilities Face Pollution Probe,” Chicago Sun Times, November 13, 1969... DX 156— Article entitled “Clean-Air Edicts Offered In Council; Dimout Suggested,” Chicago Sun Times, November 18, 1969 DX 157— Article entitled “Mikva Bill Would Make Air Pollution A Federal Offense,” Chicago Sun Times, November 20, 1969 DX 158— Article entitled “Pollution Fight—Edison Tells Coal Doubts,” Chicago Daily News, December 1, 1969 DX 159— Article entitled “‘Black Diamond’ Boom: Kleen- burn Coal Mines Enjoy Demand Surge,” The Wall Street Journal, January 7, 1970 DX 160— Article entitled “Business Bulletin—A Special Background Report On Trends In Industry And Finance,” The Wall Street Journal, March 19, 1970 DX 161— Letter entitled “The News That Nobody Prints,” " Mid-West Coal Producers Institute, Inc. DX 162— Article entitled “New Ruckus On Foreign-Oil Imports To Pin Nixon Between Pollution Issue, Coal Groups,” The Wall Street Journal, March 5, 1970 1141 xii | INDEX Defense Exhibits :—Continued DX \N68— Article Allowed $1 Approval ed,” The Wall Street Journal, April 1, 1969—___ DX 169— Article entitled “People Gas Unit Plans To Buy Canada,” The INDEX Defense Exhibits :—Continued DX 178— Article entitled “Geophysics,” Time Magazine, July 26, 1968 ___ DX 179— Article entitled “Earth’s Own Power Source,” Chicago Daily News, January 9, 1969... ___ DX 180— Article entitled “Burning Refuse To Be Used In ‘Total Energy’ Concept,” The Wall Street the Journal, June 28, 1969 DX 181— Excerpt from transcript of Hearings before : Joint Committee on Atomic Energy, i if i li ; i i J ; : gir j He Ae aft i itt le ; i i : A it Wall Street Journal, January 22, 1969 =... DX 186— Article entitled “Metal Climax, Ayrshire Sign Merger Accord—. om 5 *Conn. be A . ry Wire ‘Iowa, fees Se tee ee BEES Uk hs Mace ek ee ae ae es dee [ | > | i i ren ny pn Page C 67 Heddon (GPC) HEAATE, Sdgbaggets qgayes ah ui tte | ut ath nil | Hal | ein i mies Hig he Hilti u it TS Hee Bt Huy cut at ; i mon ELT TE RIM eon nn ae fll ale STL cael abba te ge! geet TE Usnsaneasan Gf8? Hig in Hue i} He ere HAH dint TLE | Pie aia baby avy lee 3 isSscasesaa ry et ata HELP) tsa alt ite flail ermal im HEHE fei Sut! Muu a ee ee 16 Coal Pise € 6S — 79045 and 1949, whea strikes cut supplies, and 1958, when the recession and stiff competition from resi- dual oil caussd a moderate decline. ‘This national average conceals wide geographical differences. As indicated in Table 2, growth in clec- tric utility usage in recent years was greatest in Mountain district. it ws Costs of fossil fuels per kilowatt hour mills nationally, with coal slightly less, gas roughly the same, and oil at 3.5 mills. Hycro- when available, is generally some- i costs down i 8 Table 6 COAL SHIPMENTS IN 1961 BY TYPES OF MANKETS y 2 negy Se SRABNEN Seed Liaties Cohling ak. —— Bal Mise. Tadusigy, onan mus 6 lS 4 pale is in Set att iiGeko we 2 & 3 re ae FPenhody o-- SOO 3 a ne ma Pittston ......... 3261 2 3 n 10 ws ~ United Flectric .. 535 3 =e 423 = «- 4 tincture Sees ¥ in th a hang which are * KEL, S empans SSip Tidadeee NS for 1962; latest re- for the company ported. Includes coking. *Great Lakes bunker fuel. ‘Source: Company edly increase competition from oil, particularly on the eastern scaboard. Increases in steam boiler efficiency contributed to ay rbrersctodhcaa Reed see over the past ten years, along with i mining and, more recently, reductions in freight rates. The amount of coal ‘required to gencrate one KWH stood at 0.86 pounds in 1965, unchanged. since 1961 but down from 0.95 pounds in 1955 and 2 in a. the absence of any appre jable change in thi in regi years, eventua zmption of the down-trend is expected with the addition new most of which Quan aye : plying 269 and oil 79. Relative to oil coal’s market position seems likely to be well main- tained at least through 1980. Of the three fossil fuels, coal has the most favorable price trend and there is room for some doubt that reserves of and oil are sufficient to fill the anticipated si rise in utility fuel demand. However, after 1970, markets for all fossil fuels will be subject to some erosion from nuclear power its alth the possible importation Seti oni could prove in part offsectir: CONSUM?TION OF BITUMINOUS CO! In Thoasands 7 MI, & LIGNITE BY CONSUMER CLASS as of Ke: ony ot ; anufactur a ing ker Fuel ——— - Coke & Sie Nills —— ‘Ebctric’ «Foreign shive « on St Other Retril Bad Lake tRailread Coke’ Coke & Molling ‘erment Mis. & ler Grand tikities wevcls (CiasD Plants Plants Mills Total Mitts Minigs Tots! Deliveries Tora! 39s... ri MIT SS RA 2599 92.004 Tae yt S595 $5.64 18.541 319.053 + 3.976 a Po reel NA. 265 \ is re] 15st 8.79 tess IST.T58 19.615 sts Ide... wae ete NA 16% 20 re! Sou 128 S2.087 173.9 $ VS 409 Ios a XA 12 T2923 730 $1.58: Tie ie 163.053 38.285 SS..774 ISX... 173.69 Tid NA 1.43; T2385 T4385 8.36 7.615 Ti2o 163.27 7.735 7S Ts... tas oy: is? Ts 338 siser Ms T6487 IT. 35 3, ee: ie ie i fe HS BE Mf ge Ba fe Nowe : T.c88 . w= T2475 3.62 7 107... a) Le 8.401 473 304 47 e-4 114.958 6.638 22 86t?- most mouthe fa Fiscal grace coding Tene Se wt eenear saleadee yerr th whice Gee fol nese cake ence ae less current abilities, without allowstee for long-term debt "Peabody Goal added; Unites Denteis Gast arsed, 24 Page C 76 Coal erative Company Anaiysis Reveniue Record BITUMINOUS COAL—Mergers distort the sales producers (mainly eastern) are below peaks attained records of major producers, but the Midwestern steam during the Suez crisis, but 2 recent uptrend has been coal producers (Peasopy, UNirep Execrric, and Ayr- sparked by sharply higher demand in utility and export orp Cems sing)” have outstanding records, Current sales of other markets, : Sales (1957-59=16)) a Composite Data SMINOL Caal— ‘Istend $=Mamt Noch Gd Dee *Pecbody Pit:ton Rech & United “West Bicker X Tndwsi-ils Bitcminews Col GEF Creek Col Amr Cal Coal Co. Pitts, Etec. wereld Cool Cox. ny roe 103 133 102 it $1 ao rd 194 28 6133 s 137 **33.65 wa ) _, SEeREEER § ix ° m1 83 Re 73 s? 185 310 79 14 **30.33 3? = , EES 123 a 13 # 8 NA 7S & 156 1:2 $1 125 **22.99 a SE camecnimennthinnesion é 7 120 $0 & x. 7 73 130 135 73 120 one ST pea |. , a Ww? re! 10S $s 8? 84 s» 73 7 11? $7 &9 peti =. %1 — SE ntinetenpeiainen 10. Ss we 83 3 : 7 s si 868 cs) SS Be ax | eee ill ni aieiangeblanatinibies 104 = 100 91 Si 101 s 167 33 89 $3 =e >. om erasers s 90 oi 3 — Wm 5 3 33 $$ bid rs [a Lo iencitemlimaimeniditedl ™ bf Wi pt lic Dec Deo, Dec. Mer. "Deo Dee. Doe. Deo. Dye. '* Dec — Dee ... tBased on Stand- Lewy HW = . Years ented Apr. 30 of foll. calendar te 1957; 1958-40100. *Eight ard & Poor's In- moa * tas Fuel Co. efter 1955 and Traux-Traer Cos! for 2800, "Heel opera, of Sicelain Gon eotey Group after 1954_ *1959=100. “Deqroeat pro-forma acets. of Island Creek Coal & Coal in 1963 and rice In- pr. yrs. *Comb. accts. of Westmoreland Coal and Stonega Coke & Corl Co. **In millions of dollars; other > comparable. **Y¥r. end. July 31 prior to 1965. N.A—Not Available. nd 7 4 Profit Jiargins reduction moves by most eastern producers have countered BITUMINOUS COAL — Peasopy and Unitrep increases in labor costs and some price weakness, with tectric Coat have the widest profit margins in the , refiecting operations of low-cost strip mines and the firm price structure for utility steam coal in midwestern markets (heavy development and other no: recurring costs were responsible for the 1965 decline E have attractive records, the lower margins of the former reflecting the smaller return on sales of its non-coal in the latter's spreads). MI[cchanization and other cost operations. . | Profit Margins (Se) *Gperating Income 23 a Peroent=re of a ae Consol. Eastern SIsland Maust rene eS SPervodg Pittston Roch. & United “West- Zeller X ‘ Tndustrils Bituzinous Co. GER Cree Col Amc. Cool Cool Ca. Pitta Elec. moreland (Coal Corp. , — 35 116 wa i113 a 129 «618.9 25.4 las 38 794 184 $9 — SE Reeemensmeneninn 3.9 86167 113 20 86165060| 321 4 2s 27S 10.1 32 «8S 171 11.2 = a 195: 128 (102s 7% «86133 Bs«8BG is ies 117 41 ix ae > 115 96 $ i 102 ee | % 172 «= «36 338 , en = e pe + Peer Re ee eB = w= 1 ey 16 ui 100 = a Fk 2 So m z= ee ee ee ae eS eS 225 4 330 328 . foo 2 pan ) ATES .: We te kL OR 131 576 Seer pon Wane chtnen ae $2 52 eh 0 — «— 6 3109 6 5S. det. oe ee Avg. Net Income in 1957-59 Bose Period, in Mills. of $; Mos. indicate when fiscal yr. ends. 318 2189 883 ‘317 OM 093 102% 657 0.29 ct Off {. 3 June Dec. Dec. Dec. ‘Mar. Dee. F Dec. Dec. "Dec. sda. Deo. Dew tBased on Stand- 10f foll. calendar year, "Years ended Ape, 30 of fall. calendar year prior to 1957: *Eight mos. r & Poor's *1936-39=100. ‘Based on combined data. * 100. *Bofore spec. credit. *In PF bt S228. other years eater serene not comparable. **July 31 prior to 1535. def.—Dedicit. = DEFINIZION—Net Income is simply the net profit after all charges as reported by the compeny. Net Income As a Percentage of Hevem:es (%) $Composite Data Novs 425 Cosl— Avrshite Consol. Eastern ‘Istund North Peabody Pittston Rech. & United West- Zeisler X Tndustrisl# Giti:mineus Coll. Coal GLP. Crk — Coal 7 cr Coal = Go, Patts. «Elec. moreland Coal Gorm. oe he ee a ae | 42 A RR BS Oe ee ae ee PE erinnccmmsnaien: | OB - 8S. O68. BS 68 42. EB 10.7 113 aS: O88. “MA On. EBS Co $ 62 70 58S WO 42 -~ ot -& 98 10! ° os 114 82 dh 262 oe 686: (USS OS BS a SS. She OR: Se 129 wen ies 31 oS 67 8a € $2 29 5 $3 113 15 tee denies 7. 68: 34 4 28 7 303 ef. —-; & Sint > Be ° Sees See} Sees S Pre C . $8 4 Gt a pra as. €Y Se ab ee 33 $3 05 lien cate : HREBERBER=HaS HH R#BS= gH Cie ee Ee Ph SS He we ee Be ee combined MBased Stand- *Based on consolidated revenues. *Based on pro-forma figures im 1955 *$ mos. “Based ora +7 Poor's n- Gata. ‘After spec. chgs. ‘Not im this and prior years. dustr Stock In- . exes. _— ‘ DEFINITION—Net Income is simply the net profit after all charges as reported by the company. ‘ Dividend Policies Coal producers as a group have followed fairly con- have limited the payouts of some companies. Eastsrx servative policies, although maintenance of payments in Gas & Fuex eliminated cash Payments in 1963, but periods of cyclically reduced earnings resulted in high pay- has followed a policy of steadily reducing its number outs in some years. Capital needs for expanding capacity of shares outstanding through purchases. 26 Coal Page C 78 a8 8 j % ) 3 "3 cy te os a hesaaaat aes a? TE eugnaanage Fe Th ie $ $4 tt ine tis? Dadaehea Me 4 Crt Eek, & United = West- 49.3 53 — = os 143 rivttea Ce, ch 10, 366 « June 10, 1966 ° Share KIRKLAND, Ectis, Hopson, Cuarret2 & MASTERS PRUDENTIAL PLAZA ‘Smibaso, nLUINOIS GOGO: WASHIMNATON ornee VELEPHONE RAMOOL PH © -2020 May 3, 1968 John T. Cusack, Esquire Attorney, Midwest Office Antitrust Division ‘Department of Justice Room 2634 United States Courthouse .219 South Dearborn Street | ~ Chicago, Illinois 60604. ~- Re: United States v. General Dynamics, et al. Dear Mr. Cusack: > Pursuant to paragraph 18 of the Government's draft MOtion to Produce and paragraph 4‘of my letter to you of March 20, 1968, this is to advise you that the following loans were made by UEC to General Dynamics between January i, 1950 and present time: (1) on September 22, 1566 a loan in the amount of $1 million at 6 per cent interest due Decen- ber 30, 1966; and (2) a loan in the amount of $1 million on October 31, 1966 at 6 per cent interest due December 30, 1966. Both loans were repaid on December 29, 1966. UEC . has never made any loans to either Freeman or Material Service. “ I must correct information transmitted to you with my letter of March 26, 1968. I am now advised that UEC de- clared and paid, on January 24 and 25, 1968, respectively, a Gividend in the amount of $1,500,000 to General — No other dividends were declared or paid during 1967. I apologize for the error, which was caused by the failure to include dividends: paid by the “new” UEC as well as those by "old" UEC. aoe Gx 29 EXECUTIVE OFFICE OF THE PRESIDENT/BUREAU OF THE BUDGET STANDARD INDUSTRIAL CLASSIFICATION = MANUAL 1967 RED BY THE OFFICE OF STATISTICAL STANDARDS 34 18 STANDARD INDUSTRIAL CLASSIFICATION Major Group 12——BITUMINOUS COAL AND LIGNITE MINING The Major Group as a Whole i 121 BITUMINOUS COAL AND LIGNITE MINING 1211 Bituminous Coal gece t.. ; Department of Justice All coal is sampled as received at Lakeside, analyzed by a commercial testing firm for BTU, moisture, ash and sulphur. of each value of the analysis the cost of that Shipment of coal is determined to be: (a) contract price, (b) contract price plus a bonus, or (c) contract Price minus a Penalty. If either party is not satisfied with the Pricing because of a bonus or penalty a referee sample is sent to another commercial firm and the pricing is then recalculated. Our experience has been for all suppliers that there are few bonuses and Many penalties. As an example for 1967 only on the semi-monthly coal shipments and billings: Peabody had 3 bonuses and 4 lties, Freeman had no bonuses and 1 penalties, Little Dog had no bonuses 2 lties, Royal Fuel had no bonuses 4 penalties. are based on BTU, moisture, ash and sulphur, hence the existence Of a penalty does not always indicate a low BTU content as many After the coal is received and tested it goes into either the active coal storage or the reserve coal storage. As the coal is used it is taken from either pile, but mostly from active storage, the KWH generated from each coal supplier, and the B.T.U. supplied by each supplier for these KWH. Hence the attached data gives the tons bought from each supplier, the cost of coal including bonuses and penalties and the gross generation for the year in KWH. It should be noted We have no data as referred to in paragraph 5. Without Surveys Or memoranda as supporting evidence we can say that we ~ i ~ P uf tHad UOSTSXOTN “FZ COT %595 ‘sznok Atn23, Azen *@TqeTTeaeun pue [BOO TeOOT UN SATSUedxe ezOW YR0q SBM 3T Tenz zeTTOG se seh 203 sy ‘ouoo 03 szveX Auew 203 [Tews 003 84 TITM BA ‘POTTe3sut 20 peuuetd Suteq mou exe 3eU3 SRTUN zReTONU Zo ezts Sutseezout euz Butzeptsuod pue 3} zZepTsuUOS OF TTeUSs 003 ezem 6m uoTZeZeUeS zveTONU ‘z0Z sy ‘UOTIez0eUSeS TesetTp z0z ebzet 003 ueeq skemTe SAeY OM TTO 203 BY “TOD zANO 203 zeYuRzeZ O56 03 eArY A3}sseDeu JO OM ‘ZNO peut ezem seuTW AjUNOD uOUeBURS pUe pTeTZ -~buyazdg ey3 sy ‘SULITZ [vO TeOOT ezTuCzZzed 03 estm ATTeOTITTIOd pue sseutsnq pooh yyoq sem yoTuM ‘ptetzSutzdg zeeu seutu A3unoD uowebueg z0 seutw prletz6utzdg wozz eures TeoD zno TTe szeveh zeT127ee eu UI “ARTITIN Sbutuznq TeOo & useeq sfemtTe evry B96T ‘TZ YoueW : € ebeg ger eoT3enr sO AUeWwI2edeq 45 GENERAL OFFICES 2 MUNICIPAL BUILDING I 9 SPRINGFIELD, LINOIS 62701 tr My ght & pean 0 muemen as power COMMISSIONER OF PUBUC PROPERTY uf i : Telephone 44-5791, Aree Code 217 “Me COAL PURCHASES Coal Supplier 1964 1965 Tons Cost Tons Cost Preeman Coal Mng. Co. 95,192.86 $515,930.37 118,537.02 $606,909.51 \ Coal Supplier 1966 1967 : Tons Cost Tons Cost ‘reeman Coal Mng. Co. 133,396.47 $692,864.87 135,676.91 $715,831.36 Peabody Coal Co. 104,183.00 550,562.67 101,578.59 554,184.72 Cc. V. Beck & Co. 84,441.64 456,334.63 82,552.88 449,141.05 Royal Fuel Corp. 16,841.96 85,937.81 - 15,911.96 82,360.30 Total for year 338,863.07 $1.785,699.98 335,720.34 $1,791,517.43 Gross Generated KWH 581 679 200 KwH 568 871 200 KwH Note: C. V. Beck & Co. name changed October 1967 to st. Louis Industrial Coal Sales Eddy Coal Co. Cantrall, Illinois out of operation. Mined out. R&S Coal Co. Cantrall, Illinois out of operation. Mined out. CPH: jn 3/21/68 44LINQIS PQWER COMPANY .~ 3} U ee 4 March 12, 1968 Mr. Donald F. Turner * Assistant Attorney General * Department of Justice Room 2634, United States Courthouse Chicago, Illinois 60604 Attention: Mr. John T. Cusack Attorney, Midwest Office ae Antitrust Division Re: United States v. General Dynamics Corporation et al., Civil No. $7 C 1632 (8. D. Illinois) Dear Mr. Turner: In response to your letter of February 26, 1968, we are enclosing information as you have asked relating to our fuel purchases. At this writing we have not completed calculating the information to give the BTU and Kilowatt Hour output de- rived from each supplier, etc., as asked for in Paragraph (1) one of your letter. We hope to send this to you within the next couple of days. Very truly yours, ” i Mote Q. Vice President TN baetey/. > ypunean eRe - 4419 SLINYUO \ ea a00m ¢ see csaniow Sua eet'a 4112 NOSUW 605 13|- 2aNOLINYH a % ' } 4, L “ue { Tm] ~ gat Vs” MN JN a wees .99/ST/L 40 SNTVNNOTZGEND 8,4aURETACO OL UAASHY ues'sa - da, car "se xIoaat tH “ebe'st 440'8Li (984 sha NOI -tso'cer LSh'tSl - VEMoL aNUND 216813 -yahsow : ‘ aeli@oe ALt2 Wostw Zro‘eel AUG NAaV? eie'st a tad Hsu Lg6t "SOEUALAEES GONOOERS 08 SETA Of SmRTEN ONS WOES “eNtS “He *qvOO 40 GLMaNdIHS \ Q9/ST/L 40 SUIVANOTISEND B,c0KHERELACD OL KANGUY sac 088 ‘thi | SPMD oe ‘ee wsis\\ ; | 9e'u DOMOLINYM , attiateus boo 4g > HAOUIS OD toe'ee : numaueyuly adus Nao. eet » ? paw Vi *.NUNI ANU 99/ST/L dO SUIVNNOTLSAND $,LNGANULACO OL WANSKY 'xOUNDS vaumw vi nm any * O9/ST/1 40 ReIVINCLICENe 6, iucUNELKCD OL eAAGY ‘ TLE w- } : winone \ ¢ 9H = 18 'he . sa UW 07 = HON! AND ————_———__7 sist ao waren smmemmuco oS wae ‘eounos Auta « auves he ' ‘ ‘ . yo v > ad > ° : . . °. : : . ee ; . . “ . . as 4 >. : oe os : Ps : ; . . ‘* ’ 7 , 2 ON ES igh: ty J . r vi * te we Mg + : ‘ a Ape ue Pe os a . e - » . : . “tbs” Se 3. tae oe. i ere es ; 8 ‘ * * oe’ oes $.a,°R «Ze ee 2% * - 4 a fed , ,o * ae | “ee ae * @ . 2 . hale A: 6 fe q ‘ as 4} Po hy A RE Rr ee : hy TS AND atk ice SP AS Sah ; : : kts ” ia. TS 3 Bh a ee o of Ay ey ar . - » . *. % CL PAS oe a ‘¢- .* es. a he “~ = J ; . A 7 ‘ ' . 0% ore ull tne ° ~ ¢ tf Lat ie , ‘. ’ aah . . * - a ate . . ; eg . f* i oe a F ‘ ee * - , , r : ‘ ti'-2¢ , r : ‘'y . , ‘ ‘ ‘ ° a ’ - , °4 . ‘ = ey ae : ; ois - . . . & e. ; 4 ‘at + i rw . ‘ * is \ 89/26 - co7TwBLU eet - : bee ot \ oth'bb - ONISNUT cogvuve ’ bes : ’ ; ee enter ae Aue aes ee ed -—v re 80 GX 61 ~~ ‘TOTAL COAL CONSUMPTTON IN TORS IN 1967 BY -. SEAM ELECTRIC PLANES IN THE EASTERN INTERIOR ——___ EEE. SALES AREA ae 7k 2 2 Coal Sales From Mines States and Portions of States. Iocated Within the Comprising the Eastern Interior . fotal Coal -. Eastern Interior Coal Province Sales Area . * Gal Province = in Tons) . {in Tons) Western one half of Kentucky a 10,649,000 12,051,000 Western one-third to one half . of the State of Tennessee 6,050,000 5,210,000 Near the Mississippi River 3,042,000 3,492,000 Eastern one half of Iowa * 2,267,200 2,042,000 . _— } a - defined es : » to the Mississippi River 2,298,000 2,092, 2h2 Wisconsin, Except for that Portion Contiguous to Lake Superior end that Portion Contiguous to Lake Michican above Milvaukee : at: 5,689,000 5,699,000 Indiana 19,120,000 18,697,000 Dlinois > 3 28, 295,000~ : 26, 324,000 Agreed to by Defendants ° 81 Not agreed to by Plaintiff PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPARIES AND THEIR SUBSIDIARIES 1/ FOR THE.1957 CALENDAR YEAR Production - Percentage of Coal . ef Total ope of, Comper : —in_Tons_ Rank = Production y Coal Company - 10,736,482 2 23.0 Coal Co. 2/ "1,072,758 ( 2.3) fraer Coal Company 4 170,363 3 8.9 United Electric Coal Companies 3,619,243 . 7.7 i Ben coal Corporation 3,519,263 5 7.5 T Coal & Coke Co. 2,787,035 -- 6 5.9 Collieries Corporation 2,420,301 7 5.2 a Electric Coal Corporation 2,367 ,206 8 5.0 Coal Co., Inc. | 1,599,358 9 3.4 Colliery Co. 1,156,065 10 2.5 Corporation 1,144 ,39% n 2.5 wn Illinois Coal Corporation 812,911 12 1.7 Continent Coal Corporation 72,399 3 1.6 hi Coal Company 572,559 db 1.2 Coal Corporation ' $WT 280 1s 1.2 nm Coal Company : ye 4OT 297 16 9 per Dog Coal Company - 360,708 17 8 remaining companies a 2,88 .555 6.2 Pe2s mea Mca am Production in excess of 300,000 tons. = See Deposition Transcript of Frank M. Mugent, p. 62. 82 Agreed to by Defendants Not agreed to by Plaintirr [ene 1 ieeeat PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES AND THEIR SUBSIDIARIES 1/ FOR THE 1958 CALENDAR YEAR Production Percentage of Coal of Total Kame of Company in Tons Renk © Production Peabody Coal Company 8,714,059 2 19.9 “preeman Coal Mining Corpertion «SEE SS, eee cc oe 1,071,377 ( 2.4) Truax-Traer Coal Company 3h6 ATA 9.9 Old Ben Coal Corporation 3,580,078 4 8.2 ~~ -ane United Electric Coal Companies 3,334,478 5 7.6 Zeigler Coal & Coke Co, 3,076,732 6 7.0 Ayrshire Collieries Corporation 2,343,786 7 54 Midland Electric Coal Corporation 2,340,470 e: 5.3 Sahara Coal Co., Inc. 1,565,160 on 3.6 Stonefort Corporation 1,088,962 10 2.5 Southwestern Illinois Coal Corporation 956,347 1 2.2 Mid-Continent Coal Corporation 823,966 12 1.9 Saxton Coal Corporation 637,262 13 1.5 Union Colliery Co.. “ : 517,332 as 2.3 Morgan Coal Company 573,232 15 2.3 Lumaghi Coal Company : 522,368 ws 1.2 “ttle Dog Coal Company 375,59% 17 9 116 remaining companies 23049 296 4.7 TOTAL 1958 Production . of Coal in Illinois 43,777,130 100.0 2/ Production in excess of 300,000 tons. 2/ See Deposition Transeript of Frank M. Bugent, p. 62. 5 PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES The United Electric Coal Companies Zeigler Coal & Coke Co. Midland Electric Coal Corporation Ayrshire Collieries Corporation Sahara Coal Co., Inc. Southwestern Illinois Coal Corporation Stonefort Corporation Mid-Continent Coal Corporation Morgan Coal Company Saxton Coal Corporation Lumaghi Coal Company Little Dog Coal Company 106 remaining companies 4 76h 482 3,757,366 3,661,202 3,275,092 2,482,668 2,393,452 1,637,452. 1,138,132 941,807 ' 917,139 669,672 564 ,289 505,458 327 ,830 2 ,891..433 " 45,374,626 i/ Production in excess of 300,000 tons. 2/ See Deposition Transcript of Frank M. Nugent, p. 62. Not agreed to by Plaint oo @eort Aw & w Source: Coal Report of Illinois, 1959, Department of Mines and Minerals, State of Illinois, Table 10, pages 34-5k, Gx 65 PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES AND THEIR SUBSIDIARIES 1/ FOR THE 1960 CALENDAR YEAR Production Percentage of Coal of Total Hame of Company in_ Tons Rank =ss- Production. Peabody Coal Company 9,418,967 1 20.5 General Dynamics Corporation 6,833,842 2 14.9 Freeman Coal Mining Corporation , (3.6) Orient No, 2 Coal Company 599,714 ( 1.3) Truax-Traer Coal Company 4,927,195 3 10.8 The United Electric Coal Companies 4,232,072 4 9.2 Old Ben Coal Corporation 3,512,214 5 ToT Zeigler Coal & Coke Co, 3,429,098 6 7.5 Midland Electric Coal Corporation 2,557,304 1 5.6 Ayrshire Collieries Corporation 2,165,026 8 4,7 Sahara Coal Co,, Inc. 1,722,557 9 3.8 Mid-Continent Coal Corporation 936,468 10 2.0 Southwestern Illinois Coal Corporation 933,759 1 2.0 Stonefort Coal Mining Co., Inc. 882,755 12 1.9 Saxton Coal Corporation 711,733 13 1.6 Morgan Coal Company 668 ,019 14 : £53: * Lumaghi Coal Company 563,963 15 1.2 Little Dog Coal Company 358,171 16 8 82 remaining companies 1,968 493 4.3 TOTAL 1960 Production of Coal in Illinois 45,820,632 100.0 1/ Production in excess of 300,000 tons. Source: Coal Report of Illinois, 196), Department of Mines and Minerals, State of Illinois, Table 10, pages 34-55. Peabody Coal Company 9,732,236 Freeman Cosl Mining Corporation, subsidiary of General Dynamics Corporation 6,610,362 Truax-Traer Coal Company 4 454 663 The United Electric Coal Companies 4,420,690 Old Ben Coal Corporation 3,453,795 Zeigler Coal & Coke Co, 3,390,770 Midland Electric Coal Corporation 2,367 ,667 Ayrshire Collieries Corporation 2,270,004 Sehara Coal Co., Inc. 1,769,638 6 @ a2 GQ @ FF we © 7 o Southwestern Illinois Coal Corporation 939,455 Stonefort Coal Mining Co., Inc. 909,769 Mid-Continent Coal Corporation 822,111 Saxton Coal Corporation 700,002 Morgan Coal Company 4 556,207 Lumaghi Coal Company 536,071 Little Dog Coal Company 312,192 TT remaining companies 1,886 895 TOTAL 1961 Production of Coal’ in Illinois 45,132,526 "/ Production in excess of 300,000 tons. Source: Coal Report of Illinois, 1961, Department of Mines and Minerals, State of Illinois, Table 10, pages 34-53. Gx 67 PRODUCTION OF COAL IN ILLINOIS BY THE LEADING COMPANIES AND THEIR SUBSIDIARIES */ FOR THE 1962 CALENDAR YEAR of Coal of Total Name of Company -intons. Rank Production Peabody Coal Company 10,495,479 0g . . , 9°16 §5¢ ‘coe ‘att 6°29 Siz‘ose'te 9°S¥ 409° 16 ‘z9 000 ‘00s ‘6z1 . 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Toms Received 329.710 796,656 = 472,238 1,555,569 3,142,171 $14,217 856.33 (#1 ,489 848.60) ($3 990,698.60) ($2,227 »223.41) (96 ,510,085.72) ($14 ,217 ,856.33) Ba Setumerrmyen ‘ ; 10-11-66 = —— Seats _PISSR CO. - - 33.605 285.277 163,785 660,468.93 | ) “ Re 3 > 5 3 4 0 6 7 7 apc aemees Ce iat 6 eer ee ee PCy say : : 8,789 : 8.789 _ 26,367.00 wish Dane Joveiwed 360,581 «-782,576 485,784 942,818 2,570,759 $11,981,610.96 .* ($1,683,118. 10) ($3 906,312.46) ($2,295 819.62) ($4 ,096 360.78) ($11,981 610.96) 124 Centra I”umvors Exectric anp Gas Co. United States Department of Justice Room 2634, United States Courthouse Chicago, Illinois, 60604 Attention: Mr. Donald F. Turner, Assistant Attorney General Dear Mr. Turner: This is in reply to your letter of October 14, 1966, in which you ask a series of questions relative to our coal purchases: 1. The names of the firms which supplied us with coal during the years 1964 and 1965 are the Old Ben Coal Corporation, 10 South Riverside Plaza, Chicago; Republic Coal & Coke Co., 8 South Michigan Avenue, Chicago; Truax-Traer Coal Company, Division of Con- solidation Coal Company, 524 Commercial National Bank Building, Peoria, Illinois; The United Electric Coal Companies, 307 North Michigan Avenue, Chicago; and Peabody Coal Company, 122 West Washington Avenue, Madi- son, Wisconsin. 2. The amount of coal in dollars and tonnage is as follows: 1264 as tienen eet ——— Toms ____Dollars __ United —31.688 = _189,520 212,095 $798,263 " 1265 United 38.804 143,692 217,715 $835, 505 yasery ; DEPARTMENT OF JUSTICE OCT 24 1966 gH RYisiOR cr GECORDS g; -_f 125 \ 3. During the years 1964 and 1965, the coal purchased from Republic was mined in Indiana. All other coal was mined in the state of Illinois. : : 4. Our present contracts with the abovementioned coal com- panies were entered into in 1961 for a period of five years. Our records do not show whether Freeman Coal entered a bid at that time. We are at present inviting bids from the abovementioned companies and others, including Freeman, for our future coal supplies. At the present time we have had no formal bid from either United or Freeman. 5. We do not feel that the elimination of United Electric as an independent coal supplier would in any way affect our operation. a ’ * I trust that I have answered these questions to your satisfaction. 7 Commonwealth Edison Sephseatien for COMMENMEALIN EDSON bape Aeteacon mais toe adhe Bison is an Tilinois corporation, with its principal office at One First National Plaza, Chicago, Illinois. It is _, Sngaged in the business of supplying electricity to the public in: __ Suen oity and 4m the northern part of the State of Iiiinois, and -4is a public utility subject to the ‘Jurisdiction of this Commission. we § price of fuel, principally coal and nuclear BAison is required to and does purchase large quantities of such fuels and is required to and does make forward comaitmenta for the purchase of such fuels for supply to its generating stations. 3. Fossil fuel procurement has become increasingly difficult. The growth of nuclear power has had the effect of making coal mine operators reluctant to open new coal mines in and near Edison's service territory. Restrictions on the use of coal with sulfur contents characteristic of the major reserves in the areas in or near Biison's service territory have had a sinilar effect. wn addition, large quantities of"ccal reserves in such areas are being acquired by petrochemical and other companies which have potential uscs for such reserves other than their exploitation for "fuels for electric Grraenting stations. 127 ; Prec foe ae “he "iid “tina‘Ab) ie etaddup short-inas siehten 40, ths “acquisition of yellowoake, Which contains the natural uranium Fequired as the rav'material for miclear fuel, the extent of ; - uranium reserves is uncertain. Indeed, the Atomic Energy Comis-— “Sion has indicated that the reserves recoverable at $8.00 per pound “Of yellowoake (a price somewhat above the current market) are _ Sufficient to satisfy the demands for such fuel only through about 1979. Baison has purchased sufficient yellowcake, for future ‘delivery, to meet its nuclear fuel requirements through 1975, but _ how has under consideration the construction of additional niiclear Units for which additional supplies of uranium must be arranged. ae “Bs | Bison was one of the first companies to enter the fiel4 of electric generation with nuclear power. Its Dresden — “Unit 1, which went into service in 1960, was the first large-scale entirely privately financed nuclear power plant. It has now operated _ Successfully for ten years. Bitson has also contracted for more 5 nuclear capecity than any other ‘Anvestor-omed utility. Its ates 809,000 kilowatt Dresden Unit 2 is now in preparation for commercial "operation, which is expected to begin before the sumer of 1970. At that time, it will be'the largest nuclear unit in comercial service in the United States. Dresden tait 2/will be foLiowed by ’ Dresden Unit 3 and Quad-Cities Mits 1 and 2, par with a capability of 809,000 kilowatts, and Zion Units 1 and 2, each with a capability of 1,100,000 kilowatts. “Through extensive experience with the operation of Dresden 1 and its procurement activities for the subsequent units, Edison has developed specialized technological capabilities in the proourenent and managenent of nuclear fuels. 6. A critical factor in the operation of nuclear plants is computer technology. ‘Without ‘highly developed computer skil1s, it is impossible to operate a nuclear plant; the utilization of such skills has an important effect on the efficiency of fuel Management and, consequently, on the cost of power from nuclear oe am fe power, 1t has applied these sktlls to the problens of nuclear fuel management. 4A subsidiary to provide computer services both to Bitson and to others, primarily utilities, would reinforce Riison's own capabilities and be of advantage to other utilities. Y a mall number for several years. Edison believes that by making available to such companies the advantages of its experience and "background in nuclear fuel procurement, nuclear fuel technology and computer applications, it can benefit them while improving at the fame tine the security of its oun fuel supply, its ability to Purchase nuclear fuels| advantageously, and the utilization of fuel in its own reactors, — see 8. Accordingly, Edison proposes to establish a subsidiary for the purposes, ancillary to its electric utility business, of: . : (a) the acquisition and development of fuel reserves, . both nuclear and fossil, capable of providing coenenseut and " reliable supplies of fuel for electric generation, tie’ output 129 e&s from such reserves to be made available to others when con Bistent with Biison's own requirements, and the conduct of such other fuel supply activities as may be reasonably related ; (b) provision to itself and others of nuclear fuel Bison, therefore, requests the consent, authority and approval ‘Of this Comaission to and for the formation of a subsidiary, all of the capital stock of which would be owned by Bison, and for the investment in such capitel stock, without further order of the Commission, of up to $10,000, 000. Ra 9. In connection with the establishment of such sub- sidiary, Biison would propose to transfer thereto, at its cost, certain contractual rights to land with associated coal reserves, the nature and extent of which will be described in the testimony herein, These reserves, however, will not be developed until satisfactory means become available for limiting the aul fur by-products in the stack effluents produced by burning coal of the character contained in the reserves. Since no such means are mow available, the subsidiary will initially simply hold and manage ee ee ee ee ee Gevelopment for coal mining. Ses 10. Also, in the initial stages of the organization and operation of the subsidiary, certain administrative, accounting and other services to the subsidiary will be provided by Biison at the cost to Biison of such services. Such costs to be incurred by Bdison and reimbursed by the subsidiary will be limited to $100,000 until further application to the Comission for approval Of the terms of any arrangements between Biison and the subsidiary. | al. Transactions other than those transactions above - deverided between Bilson and its affiliated interest, the proposed. ‘Subsidiary, will be presented to the Comission for approval at — “@uch times and in the manner required by law. 130 -5- : Raison proposes to record its investment in the cubsidiary and any profits or losses resulting therefros in accordance Danae thee Umifora System of Accounts for | Public utilities. ; RAID 28 eter girs rman —% vamaeen: Edison requests consent, authority and a eet forth an paragraph (8) above and to engage in transactinss | sa ee nn emma tebaen an Se. FEZ‘ La. mt wig oe 2 bce. Pesiea” i ‘upon oath, depose and say that I am 47 Of COMMONWEALTH EDISON COMPANY, an Illinois corporation; that I Ihave read the above and foregoing petition by me subscribed and know the contents thereof; that said contents are true in substance and in fact, sittin an: tn Chess. andere ctated pen ’nfoenaticn mat Welaed, Gat aarte: Anetiny/ 3 eshtone. thn :sene:te bo twos. : = nh J ad “> *. BP» ere est oe ed f Le R se eG a ies . “’ en »% “es euophey seBouny [10ue® ‘N3STZIN ‘d 304029 eBy jp0D jonupy. suedng jD0> eucjshey . suoHDa)GNg Bujyw 3 40uP2 ‘SUIMO1I ‘2 Caud1V sounded ‘AaWa “Y NHOF O21AJ0g UVOIING SMEN AjyUO-—As0};9011q eUlW |O0D—jONUDW s4edng j}O0D eUucpiey 190M s1OW—jOUsNor Buu @ Buseoujbuz—eby joo> suoyooyqng Bujuyw WH-MDD>W IWANWW SuzAna 1vOO -- SNOLSAZY «£96k 138 TVANVA SYZANS TVOD 3NOLSAIX c OOBZ+E J®AOPNY + TODOS “II! ‘oBe21UD + “eAY UERUDIW "N ZOE / NOILVUOdYOD SOINYNAG IVU3N3D 40 NOISIAIC ¥ NOILV2OdwOD DNINUIA WOOD NVINS=we "aod 03 svak Auvur 103 pue Aepo Ald -dns jo Aijinoos pue aotazas e[qepuodap jo @INS 9g ULD NOX *sUO} UOTTTIG OUO aIeB0133e SOAIOSOL JIQUIICAY ‘aoUvULIOJIOd 3UDT[IOxO Apuaysjsuog pue Ajyenb 203 * * * sour] ut SoUuyu ULUHIOIY 842 JO jonpoad & osn ‘Teoo wm gof Stpeay zo zomod jernsnpur Aue Buyop 10 ‘Adjornoojo Sunvzouo$ ore nok jy =~ = ee ee -- ee aes ee ALS DISTRICT 10 189 kg “i i ; . eit ii ie ae i aE ‘ i i 1 = Tae Ts GS a ii Mile “a2 i : Fi 3 #72 ig: i Up ih i a: , atl : P cakttpe 2 , ping ceadinla ptt i i ia alte ae ip il; ifs ni iE Siiity ag & HE . Lh adie, aca sa j is # ii if vie ual ua i sii i itll ; na a 5 tay ¥ if Fa i = iia z ot 2 aa ai : fl af if a ul | i df +" ! {2 it Sh he i alk id [ss als * é i ay ai | & a pale | ili ¢ ij Lee 7 ai He A iif aie sig HI gt ee peg rp ate Site ue ai ee z T, ji i Fe ee p83 [Ha og & 2 § el Fie ore a His i fue, ae tay iiiy of § Ts ie or iid. WATTAg § sie | oe EE Hs fg + Fi fi: ofiitig @2 astl oe : 1 Be i a dia igs 23 iE ye i ae iii Gilli gs phe || : al “f se t ig digi af ye aa 34, Oi pili ae hay = Ey a Hey Bei Th as gegty fates tetiesbiee GUM is] a) a as g 235 Gog gizess a le a 33 . iis: oe act] i i Ue ie : a a ae He $ a be a 3 ies a ice i : i* 8 : ie eit i dt dé oa ua Moe fa adely KEYSTONE COAL sve MANUAL 0990-9 ewTD + TONGR “WH ‘ePeOrED « “Rey sUPEON “Wy "cet /nouvecesed soumvnse TWeswse 40 anviersens ¥ SSINVAWOD 7wOD 2HL55978 COsSLINN BSH. "WROS 9 ‘ON ‘S}oUl)|| ‘AUNOD Aueg "$|202 pep jeey pue peysey ALINZGId "WEES S “ON ‘S}OUIII| ‘AuNoD uoyn4 "SIGOD POlJp Jeey pus paysem ‘eipew Aree} Bee as : AUVEHMONS-vano ¢ OPEL sjoujtl| ‘Aunog evoeg ‘weeg souueg 2 >. be 4 _ "J8OD peysem eipew Areay Ayienb wniweig “OUI |80D Bulpeo7-e8eg 32011 “MYIENNVS eget ox 2s SaTULSNGNI oIsva pre SHLLTILLA OILOTTA Mute ag SIVOSD DIVLODIy OQZALIAT Asenjoq easy 12007 10; 25 MONUL Ag SPUPOd YOM BIPPIW je => TIVY AG SUog Sexe] 32815 03 5 IGSSHA Suv Ag semieyem Pue|U| ey) UO SAY AOuva AG: DIRECTORY OF MINES 422 ILLINOIS—DISTRICT 10 142 ; om a ef eka 22 PUBRie ames sat i i - ? ag 4 : be is: ié Ee He ie it i ect I if ror fis i i, i 23 yf mn ie i ta “lls he nls “aiid Tene Lie fi ca > . : Sizes Washed a" ads tae t i Hl ‘Dally Cap. (Cleaned a el gi SO aa A a Si ah “it ae ark af ue ce a : alti 1é ovet eters | Fate, eal ie reall li se 3 #6 dl) rad tt da ‘sd gfe S ta een eee CaP Did 008 Sands Sold eho? #38 sea geege: 8 2S 285 Lo ibeee® ai : aig rea dig dl gence ; a pea \ id iE a SPRY Bo saad © Gee waar ae BP tes sg rs Cee NS ee oe on ee Te 2.14 ii Te ane aa ol sid janie & i ue a als | ae ly fil giinane cud AM i a 4 gat APS: RPA BARS | Seg cal oe ip gies’ | bet a: Hr aqabaitae | Pel daa eae A cae id bi i wher arn: tile lee fa Risiapliea: Bt Ube as £32 Base st we ‘a3 ote g i 38 FE a4 8 33 $8 igsa ies a HAUG te, aad SE ae ae Seg 8 MG THAD SS inprtet BSS gee ee led pt Ppp ah Si bli ig ese eae ug (LR Ta re; ES eis i: sileesislee # ial: aif; a oe bees | id * 21h elle te i Pat aia 5a: i Bis fila EF iat af ; isl) FE altel : : i iF ahd Ht i uP an ail li he ile Beets caalbslisiegity, Hi fy} calle sila KEYSTONE COAL BUYERS MANUAL 143 O08-€ JAOPNY » TOB09 “II ‘evaqua + “ay uediyoIn “w Lot / NOILLYUOdUOD SOIWYNAG IVUBNZO 40 NOISIAIC V NOILVSROdszOI DNINIIAN IWOD NVINEZea musa A 38944 pun Ryonzusy wijsDg wors 81005 BHM0A NOT puDd YO}H 22}0YD fo sso;nguING Ausnoneg sopvey Joker pute vbrny ¥ oer cope pus ‘sopnsnpuy g : 24 a spear dri: a sty aa me bs aati iii (ik te Hi ie AL purification of our water. These problems must and will be met in a partnership between industry and govern- ment. 189 GOVERNMENT EXHIBIT 247 BARRON’S National Business and Financial Weekly 50 Cents ‘ October 13, 1969 NATURAL GAS FIASCO Federal Price-Fizing Is Finally Producing a Shortage EL Paso Natural Gas Co., which (according to an article in Barron’s barely six months ago) was supposed to be “Making Fewer Headlines, More Money,” last week made quite a splash on the financial page. The company an- nounced that it has signed with Sonatrach, Algeria’s THRE 1 tHE iba Re, HUM BTE Eile : nun all : i HF Hh is Bi li adi . “it ives tite fl gig J a pigd dae sat ea i sirpats iH Che i Bay il uta at Hi dys 13 191 of U.S. exploratory gas and condensate wells declined in 1959 to 429 in 1968. In the latter year, for time in history, net production exceeded addi- The reserves-to-production (or R/P) at only 14.6, or considerably less than supply, barely two-thirds of what it was when i j iction. Some pipelines are un- tract for future needs; hence, expansion pro- j . Now El Paso Natural Gas Co. four thousand miles overseas for fuel more ‘than 50 cents per mef., perhaps moved by pipeline from. the . \ tors, as noted, have finally concerned over what they have wrought. Early month the FPC iss a staff report that didn’t reading for the boss. In brief, it concluded nal reserves-to-production ratio would de- to 10.2 by the end of 1973. “Even a substantial im- t in reserve additions above that experienced i five years will not prevent the R/P ratio from dropping to about 11.” Regional gas supply defi- ciencies are likely. “The uncommitted portion of the total Ht et. Ss : 3 : . E g CEE] BEERS yeti hd Li : ' 192 proven reserve inventory will have been exhausted by 1974, at which time the natural gas industry’s capacity for growth will be limited.” None of the foregoing, said agency lation, it decided to liberalize the pricing of gas reserves which pipelines themselves own. decision; approval of an increase of at least five cents per thousand cubic feet in both wellhead and flowing gas; unfriendly at best and, at the slightest provocation, down- right hostile. As the U.S. proceeds to import natural gas 198 He tl y NUCLEAR POWER ECONOMICS: 1968-1969 FL Ail Hite TE ue hae: lint 195 a This in turn makes it difficult to accept without some- thing more than a grain of salt the statement of the Atomic Energy Commission * “the outlook for the future for nuclear power continues to be very promising (be- cause) of the continuing economic competitiveness of nu- — clear power in spite of increasing costs as prices for both nuclear and fossil plants increase.” How did this come about? The reasons for that are many. Among the most important, but nowhere near all, are higher costs of nuclear components, higher cost of turbines, higher construction costs, continuing escalation during the entire construction period due to the infla- tionary cycle, longer construction time which results in higher interest and overhead charges, higher capacity charges in view of the current coupon rate of approxi- mately 9.5% on AA utility bonds which brings the neces- sary capital charge to give an adequate return up to 16%, lower capacity factor due to the recognition that with the growth of atomic power which will take place between now and 1980 no atomic plant can, except for the short- est time, be expected to operate at a capacity factor as high as 80% and that, therefore, a more rational capac- ity factor is one five points lower, or 75%. It is true that fossil fuel costs also have gone up, but. even so, nuclear power has lost position vis-a-vis fossil fuel (mainly coal). This can be seen very clearly in Table 1, which shows costs of both coal-fired and nuclear- fueled plants, the former in terms of an 800-MW unit and the latter in terms of an 1100-MW unit, as of July 1, 1969, for completion in the case of nuclear in 1976, and in the case of coal in 1975. All the figures in that tabu- lation are significant and striking but two stand out in _’ particular—the cost of switchboard delivered nuclear en- ergy of 7.06 mills per KWh as against 6.65 mills for coal-fired energy with coal at 25¢ per million Btu. On the basis of these figures, the competitive break-even point for nuclear power is 29.7¢ per million Btu coal cost. 1 The Nuclear Industry, 1969, page 11, U.S.A.E.C. 196 I believe these are in a sense idealized costs, but yet they have in them the element of being hardheaded and pragmatically attainable figures based upon achieving every legitimate economy. I am further convinced of their soundness in the light Fe 1. Actual costs of a nuclear project completed during the year involving a 600-MW unit where the capacity factor employed was higher—80%—and the capital charge lower—15% which yielded an expected production cane Sh SPS, Ot ere One © Pee an : 2. On a second job undertaken during the past year and carefully evaluated where the nuclear unit was in the 800-MW range and where the capital charge em- ployed was higher—16.6%—and the capacity factor was slightly higher, the expected levelized cost obtained was . ey ee . of the nuclear industry. one or two previously announced projects, delay in sched- uni f 5 1 : i : BE : i 1 ti i ge 197 DEFENDANT'S EXHIBIT 1 October 9, 1957 Memorandum to: Mr. R. J. Hepburn In connection with your memorandum of October 8, Tam sorry that the underground miner did not perform. I believe this method of mining has a grea’ a underground mining is not our Se bane Ge under the conditions, I think the only thing for us to do is to continue to wait until someone in the PMevge ok field sschans & erhiia sanilek Gal i Saee ca /s/ Frank Kolbe President 198 DEFENDANT'S EXHIBIT 2 October 18, 1957 MR. F. F. KOLBE Re: Northern Stated Power Displacing gas with coal tracts, they could consider tely 75,000 tons of 94¢ per million, 800,000 imately 100,000 tons of coal) i jon. The average of per million. nloading, storage, ash i of the labor connected wi handling coal versus ing. a very reasonable figure by them—is per million. This means we would have to at 23¢ per million or $5.20 per their plant. Our total transporta $2.12, leavi additional business. Our present contracts with them we estimate us at the mine next year, with our present barge rates, $3.986. The average price on the total would therefore be $3.67. Our portion of the would be 150,000 tons at $3.986 and 87,500 tons at I have a date with Mr. Hoffman for Wednesday next week and would like to talk with you before time. af Bs fe § . Be J. M. MORRIS EW 199 DEFENDANT’S EXHIBIT 3 MID-WEST COAL PRODUCERS INSTITUTE, INC. 307 NORTH MICHIGAN AVENUE CHICAGO 1, ILLINOIS TELEPHONE CENTRAL 6-2755 * A. J. CHRISTIANSEN a ‘ SECRETARY June 19, 1958 Mr. A. H. Truax, Chairman Truax-Traer Coal Company 111 North Wabash Avenue Chicago 2, Illinois Dear Harold: Attached is copy of an excerpt from the opinion of Trial Examiner Francis-L. Hall in one of the Tennessee gas cases consolidated with the Canadian gas cases, in which he comments on the position of coal in natural gas cases. This illustrates that coal is not going to get any help from the Federal Power Commission under the present laws, and that the coal industry is going to have to meet the competition of natural gas by their own marketing efforts, and that the railroads are in the same boat. I thought you might like to look at this finding of the Examiner. Yours very truly, /s/ Andy A. J. CHRISTIANSEN AJC:MAT Enclosure ce: Mr. Frank Nugent Mr. F. F. Kolbe Opposition of Coal Intervenors The Coal Intervenors, namely, National Coal Associa- tion, United Mine Workers of erica, Fuels Research Council, Inc., Maher Coal Bureau, Anthracite Institute, Truax-Traer Coal Company, Baukol-Noonan, Inc., and Dakots Collieries, Inc., as* representatives of competitive fuel, transportation and labor interests, presented ex- tensive evidence in the consolidated proceeding in opposi- tion to the expansion of natural gas service in the mid- west. This presentation appears to be designed to show the impact of displacement of coal by natural gas in the competitive area and will be considered in detail in the Examiner’s final decision dealing with the competitive issues. However, in the event any’ part of the evidence pre- sented by the Coal Intervenors be construed by them to relate to (1) the proposals in Docket G-11107, (2) the disposition herein made of the issues involved in this industry is constantly competing with the suppliers ~ As one of the witnesses for the Coal Intervenors testified, “I think that coal in the future should expand, though probably a grad- 201 other forms of energy for the consumer’s dollar and it is the needs and wants of the consumer, not the actions of a regulatory commission, that determines, or should determine the extent to which a particular industry shall prosper. In this day and time people do things differently and better. They prefer the modern way of life and its con- veniences and are mindful of the fact that gas has brought greater prosperity and better standards of living. Unless there exists in the consumer’s mind an atmosphere favorable to a particular fuel sale, the sale becomes im- possible in a competitive market. Accordingly, for the coal industry or any other fuel industry to win the competitive sales battle it must ‘give fuel consumers a better reason for buying its product.” * The one factor which is perhaps giving natural gas distributors their greatest concern today is the skyrocketing prices paid to pro- ducers for, as hereinabove indicated, a continuation of such in- creases could push the cost of gas to the point where the average consumer cannot afford to pay for it or convert to its use. This factor, however, can be controlled by the Commission in appro- priate circumstances (Signal case, supra) and may have to be controlled to prevent nullification of the “primary aim” of the statute which is “to protect consumers against exploitation at the hands of natural gas companies” (F.P.C. v. Home Natural Gas Co., 380 U.S. 591, 610; Phillips Petroleum Co. ‘V. Wisconsin, 347 US. 672, 685). Whether the Commission can or should exercise its discretion in a certificate proceeding to keep producer prices down to the point where they will not exceed average field prices is one of the issues presently pending for decision before the United States Circuit Court of Appeals for the Third Circuit in Public Service Commission of the State of New York, et al. v. F.P.C., Nos. 12,401 and 12,403. This case involves the contract price for CATCO gas reserves acquired by Tennessee as a part of its over-all gas supply relied on in Docket G-11107(17 F.P.C. 732, 890). It would appear that every increase in the field price of gas that is allowed to become effective will prove to be another shot in the arm for the coal and other fuel industries and a darkening cloud for the pipelines, distributors and consumers. Under no circumstances should the producer’s appetite for higher field prices be permitted to become a pit into which any segment of the industry may fall. Stated another way, the»profit sheet of the producer is not the only yardstick of a healthy industry, for now that billions of dollars have been invested the investments must 202 Obvious factors account for the ascending demand for natural gas for both home and industry use. Gas rather than some other fuel has carried a greater selling power in the home because of its convenience, cleanliness, laborless features, and the further fact that up until now industry has converted to the use of natural gas it has done so to reduce costs, improve products and processing continued growth. And it is necessary to pay the price for the sake of the fu t. 33 ail idetett huis i it a peipe ii Hitt ui iy Etat | il Bsts Hr philtia hf i Yours very truly, /s/ J. M. Morris W. EH TE ilacgsf aL : : Z $383 a s* rata 3 Lalani Sie Raa i Evie : tit Ht i ea Pd LP if 138]; 54g peepeaellagtes 3 et SIF i ft Oe ) Sart Z Bs nas. .BS% i et ii (een! geereig Teedine Eig i384 s2azgas : - aad, CBU ES eli HEHE ate bs sieisie: a, ain ap 1 Wie 123448 aaanaet ee a ee ih E a aa ayharstas 4 33155 z “3 $4 4a ES: pita] ia aa fe H the 4 HE “diag aes Per HT pigs a: Bess as i nor ai justified in Number Six coal, we and Very sincerely yours, President we believe that if a large investment at the present time 7. (ili fey i 8 E E ; : ; E f igf ats a z cE FEE: Ce 2 210 DEFENDANT'S EXHIBIT 7 WALL STREET JOURNAL Friday, November 21, 1958 BUSINESS MILESTONES e e Enclosed is a vory rovrph draft of the highlights of last yoar, which might serve * 4s a guide for what we will say in our Anaual ios -Copy of the Mined-I.and Conservation . : ' Conference brochure is also enclosed for your. informiion. You will note wo aro riven cen-=" ‘ sidorablo rocognition 4n the last threo or. four meres. ges . After you have looked this ever, we »ean talk about dt. iit og “- . 4 . gt? a : REVJEd OF M3 YEAR Sica m eee Sales of the Gonpary vere the highest on rece - $ ; = an increzso of 10% (2) over last year. Wet fect wee 8. x ees tniotie ares ete grovians. EC ree ee 9258 ; At the ond of our fises) year 1963, bank loans anounted to $1,708,299 and all of this was retired during the year ended July 32, i98h. : | The dividend rate of $1.80 per share amiially was continued throughout the past yoar, PS ats ge ae Ne EONS cle g fag 2 ’ kes we ~ ‘ - 8 Capital Additions i; Bate 28 a oe A new heat ‘ryer was installed at the Piaelity Mine and oterted eeveAting te January of 1964. This dryer removes the excess moistare fn the washed coal, in- . ereasing the BTU value and avoiding the extreme difficulties ‘of frosen cogl in severe ‘winter weather. Prior to the instalation of this aryer, our shipments were seriously curtailed during extrénely low temperatures and this will now be avoided, The dryer has performed in a very satisfactory manner and inte in qcoend with our expec-". © tations. ‘ a 3 | We purchased during the gost’ flacal sear twe 100-ton haulage Sicilia ap vegans 2 worn-out units and this program will be emtinued as replacenent is necessary. Tha largest trucks ve had in use prior to this tixe were of $0-ten capacity, with somo « smaller units. We expect ereator production and some reduction in our banlage costs as these larger units are put in service. = : Somet ime Curing. the next eighteen months, it. wil) be. necessary to move sox heavy equipment to a new location at the Cuba Hine, which will involve considerable expense. Aso the acreare we are nos working at the Mary Moore Mine will be exhausted. Tis will invedve eayonse in ovine the equspment. Mary Moore has been # small pro- @ucing preperty and this will not reflect any substential reduction in earnings. =a : Ho other larre capital expenditures, except for normal ‘replaconent of equipnent - and for additions) eon, eee, are contemplated dering the next fiscal yours - Protucticn and Censexstien — wie 2 eae Tobles, with phar vege to foeroese in meatty eenswastsiy vhsen crn be eecounted for by one of our dercer vistity exstenars, Ceol Deposits _ Orpenization Chanres None 7777 otc ‘. : Goneral Dynaaics Corporati on now cms _ ‘shares, or _& of the - outstanding common stock of the Conpany. - Chenge 3n Pisead Year SE Fate Tak Ue, wt: Por soue tine it has appeunit éesireble to Slee our fiscal yeer end frea July 31 to 31. This will make it easier to compare results of the Conpery - with those of other coal sietnaul and industries. kpproval of the change res euthcerised by the Boerd of Directors dering ‘the fiscal years The iuterin vadimehs for the five-vionths peried ending Docenbor 32, 1954 will be sent to our shareholders and elso incorporated, in our Annual Report for the rarest year 1965, Which elso t wil} be, ow fiscel year, 245 DSA rt ae PRESIONNT'S LETT2R VO SHARSHOLDERS As you wi)2 sce fron tho following pares, 1964 was .a very good year for your Conpany. inoeiite feverable veather and fool operating contiticns at a of our nining properties contributed dubstontially te the restlts. Incressod sales to our custesers, particularly one of ow Jarger utility users, made it possible to produce a recon’ S, , tons. More coxplete detatls of the yerr's accomplishments are described under "Review of the Year*, J We continue wherever possible to reclaim Jand which has been xfned end "put $8 to the use fer which it ds best adapted, Pictures in this report show somo of the recreational facilities that have been established and are being used. Most. of the responsible strip coal nine oporaters ere doing. this. The enclosod " Brochure produced by the Mined-Lond Conservatioa Conference shows the variety and extont of activities in this direction in nay States. Our Coupany 3s 2° menber of the Confcreace end contritutes doth tins weatiteenn aba a aa talonts of our orgeaizetion to its work. Ald of cur eqeetine ere caryeutly producing close to wientie and we continue to viow with optinisa the future of the coal industry. We have always had the sincere and, fwd cooperation of our entire erpanization und ve ere rrateful te our sharehaldore, menbers of Ng Board of Diroctors and an exployoos for thoir_Antorest end efforts on behalf of tho Coapany. : June 29, 1965 qeedht alist i He Ay ul | i3 Hie nity 7 i sit Nan 2 3 Tr reat Hea ’ 247 ‘ { 7 el . ' Tux Uxireyn Evecrvic Coan Companies ennandi dicate 3O7 NORTH MICHIGAN “AVENUE 300 Tons per Shift §3.077 00 Tons Shift $2.60 $00 Tons per Shift . $2.325 The attached sheet. shows costs accrued in trucks in the pit for the periods indicated, Our fiscal year cndod July 31, 194) was the best in the history of the Conpany and Fidelity Nine was in very good stripping and operating conditions and achieved a cost of $1.4) for that od. For the pericd’ beginning August 1, 1954 and ended December Jl, » you will notice a sharp increcse in our total stripoing cost fron 67.1; to 89.0, and for the nine months ended Septeuber 30, 1965, we again went up sharply due to opening the new Green pit, increase in drilling and blasting, ani the ~ git for operating tvo machines while we were developing this new te. I think a fair estimte of total cost in trucks is probably around $1.50 and this ceapares with the undergrounri estimate, if we assuns a middle-of-the-road basis of h00 tons per shift, of $2.61 in track. It would appear that a difference of 604 per ton is too much to justify trying this method. We can discuss this further soxetime at your convenience, Yours very truly, f ‘ , 2 —_— \ D corn een Je: EY moe ~ Proms, Kuno | Cmecaco, hao xpis GOGO! Marinas. te {Cuba Octobe: 27, 195 Sane memes Pecebi de Meine : ne aes oly LeePs sessiiinisiiptiaieiensciiceniiaiel wnt etchen Zewcbe a i V5 4 : Krocab af 4 ZAsifley N fnstest LAL Yoofsr Ghoppond boat l = [| ot Asa se. | lors . sa $069 ; H a i | Pog | | ea +020 we Poe he | +04 F Ws ay ayy) 2s la dia ar) — +0? jee ! fe | j LObf Y Bos ; 147 A Aso i Beiaeeia . ' ' tora tor | joa 7 lew ‘ ? ‘ 204) ovr 2645 mg ajeZenanee | f) tore tor ~ jay ee | | I | | i ‘ i ' ' i : Ziff Leck ; : tad Fem ! goad t We heniel | i Wve . deoo yoo or i iyi } ew | Ovér btad (4% Pepe) 1 08] 789 | 4099 ay oy ae J 7 Cu 2, f): ‘ ° | fad ! ae 4 | | a os nae te oe 99 | ages | tend _| Pog . : fo ee t : | | j } Oc oer 2b, (76ST | ; : ae Ss 4 = PA Sal : H ; i x i ; ; re = oe =e ae i i es. ee ee Ro SS .-t ; : ny i | = bs © ie ie uae ‘ . re 4 1 2¢ Cmaineoul JOUNactis Tidigghue CHessageross : a = * Ganeact Orrwes aay Pros, i. 61902 -6) Pore : fei ae DEPARTMENT OF JUSTICE ff ert) Room 2634 United States Courthouse | | % ' Chicago, Illinois 60504 = ee eee. oe i ee 60-0-37-920 ; September 12, 1969 BY MESSENGER Reuben L. Hedlund, Esq. Kirkland, Ellis, Hodsoa, Chaffetz & Masters ‘ : & Prudential Plaza Chicago, Illinois 60601 Dear Mr. Hedlamd: - By letter dated September 8, 1969, you requested inforira- tion concerning the sale by Peabody Coal Company of a new coal coapany (which Peabody refers to as the "Midland Division") which is required by Peregraph VII of the Final Juggment in - United States v. Peabody Coal Company et al., dated October 23, 1967. — 53 Your first request is for a list of the companies approved by the Government as eligible potential purchasers of the Midland Division from those firms which had expressed an interest in the properties to be divested by Peabody. On July 2, 1869, we advised counsel for Peabody Coal what our views were at that time with respect to the following prospective purchasers: Group 1. No odjection - subject to receipt of satisfactory financial information: Alberta Coal Ltd. New Era Corporation : Sherwood-Templeton Coal Co. Inc. H. E. Drummond Coal Co. Inc. Group 2. No objection: Cerro Corporation Utah Construction & Mining Co. The Cleveland-Cliffs Iron Co. Ziegler Coal & Coke Company 265 Group 3. Reserved: Panhandle Eastern Pipe Line Company Pickands Mather & Co. Cities Service Oil Company The LaSalle Corp. (Reary Crown & Co. ) Great Lakes Carbon Corp. American Smelting and Refining Co. Ashland Oil & Refining Co. Group 4. Unacceptable: Pittsburg & Midway Coal Mining Co. The North American Coal Corp. Your second request asks for the total tons of recoverable coal reserves assigned to each of the Midland Division's three mines, whether owned or controlled by location. Peabody Cocl Company has represented that the total available coal reserves owned, leased, under option or controlled by location for each wine are as follows: Elm, approximately 65,000,000 tons. Mecco, approximately 55,000,000 tons. Allandale, approximately 8,500,000 tons. As you are aware, coal reserves “controlled by location" refer to coal reserves in the vicinity of a mine which reserves are owned by third parties and which reserves may be acquired in the future. Your third request calls for the expected life of the three mines. Paregraph VII of the Final Judgment requires the sale of a coal company producing and selling 6,000,000 tons of ‘coal each year that shall have or shall reasonably be expected to be able to obtain sufficient coal reserves for continued production and sale of bituminous coal of not less than 6,000,000 tons each year for 20 years. Peabody Coal Company offers to sell the above described mines to comply with the Final Judgment. 266 UOTSTATC IJsnz3TQUy S°TJFO Wseupty ‘Asuz0j3y yoesng *Z uyor~ PENI L777 &a 77 f Lis 1 on * [exeue9 Aeuz0;3y Jusastssy NAYVICN °A MUVHOLY ‘sanok AjTer90uTs *Tesodoid juowetII0s PB Buy Je[NU10F uz nok 02 [nzd{oy oq {TTA UOT JeUZOFUT STYy? 3eYA odoy T | °696T ‘ST tequeqdsg ez0zeq 20 Uo PeIaTWqns Sq 03 Sptq perzAuT sey Aueduog [x09 Apoqveg ey Sutpueyszepun ano st 37 "6961 ‘EZ 22902399 a20Jeq 20 Go Ae3TAMAepuUN Uv YZnoay, oT[Gnd a4 03 ys03s JO e[vs oy43 &q 20 sd3¥3g poqztug sy 4q pororddes assuyornd & 03 sscutenq T#O9 942 TIes 03 Auedwog Teo9 Apoqeag seatnbex Juew3pne TeuTd ONL *eTes Jo a3ep poze{dwsquoo sy3 pue PUSTPIN JO Sioseyoind [eT Iueod woxzz sptq Fo UoTSstTuqns ey3 r0F PTNpsyos swe. Jussorzd oy azoxy syse ysonberz yqWAnoz aznox 267 DX 38 seigler Coal & Coke Company and Subsidiaries 1965 Annual Report Production of coal in 1965 amounted to the difficulties, we are still hopeful that our ‘ ii TL HEF Hetty Hy iit lin u i if PH iad 1° é dapiyt ait | ‘HTH ly Hl ity : i il 4 it ! iit In TEM Ta Walle aidatl Hi TEN YEAR FINANCIAL SUMMARY Pes Share Year ARIS A. gl. Vales Ratio 1965 $17,600,534 $1,026622 479,687 ~—~«218 $1.00 $28.89 281 1964 17,371,027 1,009,603 476,382 —~«D.12 1.00 2781 261 1963 16,620,692 716,762 406,382 ——*1.30 1.00 26.4 395 1962 17,333,499 628053 471,806 1.76 1.00 2654 397 1961 18,078,645 992,667 462,781 2.15 85 26.05 373 1960 19,135,496 1,062,510(1) 440,256 24111) 75 25.03 356 1959 19,157,595 773,210 423,400 «1.83 60(2) 23.37 319 1958 19,395,540 737,805 409,359 1.80 .60(3) 22.81 1.96 1957 21,326,174 372,603 390,965 95 r) 265 266 1956 22,590,625 966,975 392,263 2.21 rT 2a 256 (1) Does not include Non-Recurring Capital Gain of $224,276 or $.51 per share. (2) Additional 3% dividend in stock paid December 10, 1959. (3) Additional 5% dividend in stock paid December 11, 1958. 270 DX 39 Zeigler Coal & Coke Company and Subsidiaries 1966 Annual Report . . be reported in the of oer sew by pee Aes output of which will so lene Val Aut cou conc Meare year o Net sales for 1966 of $17,441,404 compared with $17,600,334 the year before. Artist’s concept of surface facilities of Zeigler #9 mine. 271 aE fee eb: sii jul i Hi at TST ad hi at f March 27, 1967 272 DX 40 eed Coal & Coke Company and Subsidiaries 1967 Annual Report TO OUR SHAREHOLDERS i A He Glep BLU ath HH FT. Hinde fii pagity ie if itty ip eee j ili Ht i HL HIE AL Hy Hi {1 shit Hl it filiale Hay HE : SEs BE iii } hasy Big PES HEH Ba li Mhit a ot [ij Hi HT ie ih i ff He : j etal F it Mw Hit it i ital Hl HF ite pitt $ ia 5 Te a Lit He us il vfs ial BU i fii: EEE HA PE : lin Ht lied! il iat Hi li 274 Company and Subsidiaries Zeigler Coal & Coke 1968 Annual Report DEK 41 Tet fo peep Gmye of 658.083 & 1 pe tee me eer of ETM IM & ¢ St pe shee ) Gene 2 None TN ewntems o $15,312,751 compared with $15,861,781 in the preced- ing year. enjoyed one of the best years ‘in its history, earning $1,341,839 or $2.81 per share. Produc- tit ial i: a Ha iH i th i a Hh n RE ; 5 wil} A. na ; HE i 3 aul ai af il Ke i ail yl "s fap HH Hill Hatt ; halides UH Util Li ra a3 i Hi [i iE 278 REPORT ~ TO THE SHAREHOLDERS THREE MONTHS ENDED MARCH 31, 1969 ‘| ZHEIGLER “, Goel & Coke Company 202 SOUTH LAS Mt SSO, NEL NS Eteo: To Our Shevrehok!sr: Accompanying this report of opcra- tions for the quarter ended March 31, 1969, is a dividend check to your order in the amount of 25 cents per share. Sales for the first quarter of 1969 amounted to $4,728,335 as compared with $4,414,979 for the same period of 1968. Costs and expenses rose to $4,282,899 from $3,973,342 the year before, leaving an opcrating income for the first quarter of 1969 of $445,436 compared with $141,637 for the 1968 period. There was a decline in “other income,” derived mostly from oil and gas ropzities, to $112,169 from $156,276 the year before. Net income for the first quarter of 1969 amounted to $184,787 equal to 39 cents per share on 475,408 shares outstanding. For the comparable 1968 period, net income was $217,411 or 46 cents per share. Smaller earnings for the first quarter of 1969 compared with 1968 are attrib- utable to a decline in income from oil CONSOLIDATED STATZAINT OF LYSOIAS Three months ended March 31, 1969 1968 BOE I ho ins rae soa ce mannnss cad cha Gea Cannone cn sanes $4,728,335 $4,414,979 SE I oo aah kk cok an ei cnc ibe cneecceees 4,282,899 3,973,342 455,436 441,637 I ai cu wc clin s oh cman cd vetaudndsuisenesasien ss 112,469 156,276 557,905 597,913 Provision for depreciation and depletion ...................005 373,118 380,502 Income before provision for Federal income taxes .............. 184,787 217,411 Estimated provision for Federal income taxes* ................ -O- -0- UE PIN dnc. ck vcs ieesccadveucheccnbeneasees seschguaven $ 184,787 _ $ 217,411 =——_—__ oC SN SOOM cranny cinmwi daes 606,60 cnckans susnghocadts 475,408 475,408 eee Sn OP MI Bos oka concen vende vituaeecceas $ .39 $ .46 * Sales for 1969 and 1968 include $310,000 and $210,000 respectively of previously deferred coal production payments. Applicable deferred Federal income taxes were offset by the tax effect of percentage depletion allowances, carryforward and other tax credits. The figures presented in this statement are subject to annual audit. and gas sources and to losses sustained in operation of our 34 Mine. This mine Continucs to cxusc opcrational difficul- tics due to faulis in the scan. We are hopeful this can be corrected very sson. However, we are happy to be able to report that operating resulis at all other propertics were most satisfactory in the first three months of the ycar, and we Sce no reason to anticipate eny change in that trend at these mines. Cordially, President May 7, 1969 SITS REPORT TO THE SHAREHOLDERS 7 SIX MONTHS ENDED JUNE 30, 1969 2Co SOUTH LA SULLE STRLLE, CiecASu, MLMiulS 6960% To Gur Shavetsc!'sr3: This report of opsrating resulis for the sccond quarier of 1969 and the first half of the year is ccompanied by a dividend check to your order in the amount of 25 cents per share. For the three months ended June 30, 1969, net income amounted to $363,255 “compared to $315,084 in the same pe- riod for 1968. Net income per share equalled 74 cents in 1969 against 66 cents in 1968. There were 483,236 common shares outstanding on June 30, 1969, while on June 30, 1968, there were 475,408 shares outstanding. Net sales in the second quarter of this year totaled $4,635,887 compared to $4,070,026 a year ago. The satisfactory resulis of the second quarter contributed to an improved showing in the six months ended June 30. Net income of $548,042 in the first half of 1969 compared to $532,495 in the first half of 1968, Reflecting the in- creased number of sharcs outstanding this year, profit per share amounted to CONSOUDAYD SIAMEMENT G2 CONS Six months ended June 30, 1969 1968 SO BUD os sth coce ce urediconnminakasicd te $9,364,222 $8,485,005 Costs and Gupenees .. oon sie Se ES ae 8,214,661 7,478,693 1,149,561 1,006,312 DEE OU oink tins geccidbbekecive thick ce 171,115 289,754 1,320,676 1,296,066 Provision for depreciation and depletion ............... 000.0000. 772,634 763,571 Income before provision for Federal income taxes .............. . - 548,042 532,495 Estimated provision for Federal income taxes* .................. -0- --O- Sit TRNNN osssn denn ncadec@handacdigbasiadushsdscs ction s. $ 548,042 §$ 532,495 —_—_—_—_ p cparesrciy hemes fe EE Le pace dpedecn 483,236 475,408 Wak Lemma par MN iS) as Soe io Sas ick eee $ 1.13 $ 1.12 * No provision for Federal income RS due to the carry forward of tax credits. The figures presented in this statement are subject to annual audit, ~~ ee ne $1.13 for the first half of 1969 com- pared to $1.12 in the same period of 1968. Net sales for the first six months of this year were $9,364,222 coinpared to $8,485,005 in the corresponding period last year. Other income, principally from oil and gas sources, decreased by $118,639 in the first half of this year compared to the first six months of 1968. For the first six months of 1969, other income amounted to $171,115 compared ‘to $289,754 in the first half of last ycar. Operating results at our Zeigler #4 mine improved appreciably during the second quarter. Indications are that the improved operating conditions at this mine as well as at all other prop- ertics will continuc in the months ahead, and satisfactory carnings for the bal- ance of 1969 are anticipated. Sincerely, President August 7, 1969 REPORT TO THE SHAPZHOLDERS NINE MONTES ENDED SEPTEMBER 30, 1969 ZEtGUE? Coal és Cae Compeony 202 SCUnti LASALLE SIDECT, CHitA50, INS SOc08 To Our Sharshe!c'srs: Accompanying this report of opera- tions and carnings for the third quarter and the first nine months of 1969 is a dividend check to your order in the amount of 25 cents per share. For the three months ended Septem- ber” 30, 1969, net sales amounted to $4,496,172 compared with $3,563,498 in the same period last year. For the 1969 quarter, net income amounted to $255,787 or 55 cents per share, which compared with a net loss in the 1963 period of $56,324. For the nine months ended Scpicmber 30, 1969, net sales totaled $13,860,394. For the same pericd in 1968, net sales were $12 048,593.” Net income for the first nine months this year amounted to $803,829, equal to $1.68 per sliare as compared with the $466,171 or 98 cents per share earned in the same period last year. Under date of August 5, 1969, Texas CONSOLIDATED STATIGINT OF Ecos Nine months ended September 30, 1969 1968 ME ii 5 aio & ae rich phhdtie bdiniie ew narvese helen 0 echwbsins $13,860,394 $12,048,503 SNE i niu ccne Kars eentuievg ines oacndop¥epos 12,159,920 10,893,378 1,700,474 1,155,125 SE SUED on on gradios wodtniupi cess Tdp as cdsehepvesdeeeces 261,842 393,417 1,962,316 1,548,542 Provision for depreciation and depletion ................+..-. 1,158,437 1,082,371 Income before provision for Federal income taxes Estimated provision for Federal income taxes* eS CEO re 803,829 466,171 Uae Seer eye -0O- -0- Phot p Sa $- 803,829 $ 466,171 aS =———_—___ gnnsceis's okie 478,704 475,408 Seabetewsmeaus $ 168 ~~ $ 88 * No provision for Federal income taxes required due to the carry forward of tax credits. The figures presented in this statement are subject to annual audit. . Gas Transmission Corporation notified the Company of its electica to exercise its option to purchase the Company’s intcrest in the Bethel Formation under- lying the Company’s holdings in The Midland Field, located in Muhlenberg County, Frentucky. Independent geo- logical consultants are presently deter- mining the reserves in place which will determine the purchase price. As of this writing, production of gas from the Company’s holdings in this field has been terminated. . Sincerely, Bete eae President November 6, 1969 6-10-69 (ATRR) TEXT OF REPORT OF NIXON TASK FORCE ON PRODUCTIVITY AND COMPETITION SUMMARY OF RECOMMENDATIONS OF THE TASK FORCE ON PRODUCTIVITY AND COMPETITION We present bere a summacy of the recommendstions of the Task Force on Productivity and Competition, These recommendations are elaborated and defended in the ac- Report. 1. We recommend that the President isve a general policy stavement (a) establishing the Antitrus: Division as he effective agent of the Administration in behalf of a policy of competition within the councils of the Administration and before the independent regulatory commissions; (b) urging those conmisions to enlarge the role of competition ia their industries; (c) masshaling public support for the policy of competition. 2. We urge the commissions to permit free entry in eccation permits, to appoint at least one economist to membership in each of the major commiszions, and instiwre effective procedures for the review of the performance of the commissions, 3. To eahacce the effectiveness of the Antitrust Division, we urge the Attorney General and the Assistant Atoracy General in Charge of Antitrust to insist that every antitust sult make good economic sense, and to institute conferences to assist in the formulation and frequent reevaluation of exforceme nt guidslines. & We recommend that the Department of Justice emabtist close liaison with the Federal Trade Commision at ‘eies and to proceed wader section 1 of the Sherman Act-- which ia our judgmest reaches all important forms of col- Imsica--in instances where pricing is found after careful in- vestigation to be substantially ve. : J. The Department of justice Merger Guidelines are extaordinarily stringent, and in some respects incefendbie. We suggest a number of revisions in the accompanying & We srongly recommend that the Department ée- corglomerate % wh easement godtagptinten w taante te monetary penalties, at present largely nominal, for price 10, We urge a new policy for antitrust decrees, The Department should not seek the eatry of regulatory de- crees: decree~ that envisage a continuing relationship with no more than 10 yeacs from the date of entry. And the Department should undsriuke a review of existing decrees to detennine which should be vacated as obsolete or in- 11, The Expediting and Webb-Pomerene Acts should be repealed, and the Robinson-Paunan Act substan- tally revised. 12, Mr, Alexander L. Stott disens from certain parts of the Report and from certain of the above recom- mendations, Mr. Raymon Hy Sfulford diseas fram two recommendstions. : REPORT OF THE TASK FORCE ON PRODUCTIVITY AND COMPETITION The Task Force on Productivity and Competition submits {zs report oa the problems which will be confronted by the new administration in this area, and the steps which we recommend to be wken, The report is presented under three general headings Coramission, which are as hard on economic theory 2s om —ergers. . We conclude that substantial r=trenchmeat by the thon was on the rise in American indusry. ' Overzealous en- forcement of consumer- but by competitors, whose interest lies in protecting their ante, wt egeegenen nanan elaborate requirements relating to packaging, safety, etc. Umit campetition, reduce Presidentially -in- splzed reforms would run up against 2 long tradition of megarding the independent agencies t= general -- and the FTC tn particular -- ay “arms of the Congress. * That has at profoundly good, and we propose na major change in tts enghads we @uastom of cen Te Sact, es ahene B and Oligopoly -- the industry composed of a small num- ber of -- Presents the most Problems in a policy for competition. The will behave or . The third is the matter of if firms tn an oligopolistic indus- ay casement temahetnen Must one press for # remedy s0 radical as dissolution in onder to stop future repetitions of the offense? (And should the standagds of Permissible concentration be wholly different for pending mergers than for established enterprises?) are partly known: 4 The easter (quicker and cheaper) new firms can enter the induscy, the smaller and more short lived will be the monopolistic restrictions. the 3. The larger the effective number of firms the less the of collusive behavior -- collusion ta- 291 6-103 (ATR) That is, tf the largest firm bas 1/5 of the industry's @utput and the remainicg firms fall off in size regulariy, the effective number of firms is of the orde: af magutude @f 10, By this is meant that the conceatrstica ih the fedustry bs eGuivaleat to what would exist if there were 18 firms of eqz=al size. There are other influences which probably but less certainly affect the probability of competitive behavior. Cue of these is de size of buyers: larger buyers, for a variety of reasons including possibility of backward integration, make for more competitive prices. Numerous statistical studies have been made of the velationship between concentration 2nd rates of retum ca investment, and these studies genezally yield positive but loose relationships: concertration fs nx a major determin- ant of differences ameng indvstries in profitability, although ft may sometimes be a significant factor, Rt appears also to be true that somewhere between five and ten effective tivab (Le, , a largest firm with a share of 1/3 to 1/5) are wsually encugh to insure substantial elimination cf the inflvence of conc2ntration upon profitability. akan seth diheeglity hes baht gaunt tein the antitrust laws (perhaps amended) to deconceatrate highly industries by dissolving their leading firms, We cannot endorse these proposals on the besis of existing knowledge. As indicated, the cocrelation between con- centration and profitability ts weak, and mary factors be- sides the number of firms in 2 market appear two be relevant to the competitiveness of their behavior, While a flat con¢emnation of oligopoly thus sseams to us unwise, we commend w the Antimust Division a policy of strict and of the highly industries, B, im any of these industries, pricing is found after careful imvestigation to be . the @No. 413) X-5 crucial, for if the market is drawn narrowly enough, virtuaily any mecger can be =nade to monopolistic in iu effec. Unfortunately, as they are ently drafted the Guidelines seem to Invite a stantial degree of market gerrymander- ing, especially in Celineating regional or local markets, The Guidelines” test of whether a product is sold in less thaw 2 sattona! ma-ket bs loose, Any group of competing se)lers in the industry us a relevant market, unless the defen- dant can show tha: mere ts wo “economic barrier” preventing ceber seliers from slzng in the particular area. Such a barrier may consis= of Costs, Customer inconvenience, jcustomer preference fe> the toands presently sold in the area, or the absence of good distribution facilities, This is 2 misle2cing test. An industry may be riddled with the kind of “bazriezs” cited in the Guidelines and yet still not contain any mezxingfu! local markets, An example will illustrate, Assume -opriate touctztoae of illegality for such modestly the purposes of (1) allowing levels, and (2) act protibiting, but reviewing. those above critical level, wich ar implied probability that he more a propcsed mezger lies above the level of automatic approval, the less &-cedure that should be followed better to ptilize existing kn>.ledge tn fasbicaing the Guidelines. market within which to appraise the lawfalsess of a merger is a 292 / X-6 (No. 413) Vertical A merge: thst involves the acqui- sition not of a competitor but of a customer or a supplier is a vertical merger, and the present Guidelines contain strict Umiting such For example, if the sup- firm in the merger has a 10 percent share of is market and the purchasing firm has 5 percent of the purchas- es in that market, the merger will be cha Our task force is of one micd on the undesirability, of an extensive.and vigorous policy against vertical mergers: vertical inzegrstion bas not been shcwa to be presumptively sorcompetitive and the Guidelices exr in so treating it. Within this area of azreemect there are two positions arcund which tie task fore members cluster. The one position asserts that many, and perhaps most, vertical mergers which do not have dicect borizontal effects are innocuous, but that ia c=:tain situations a verti- cal merger will have anti-competitive effects, These situ- ations include: increases in the capital or other require- meas for an integrated firm may retzce the posibility of ing that an anticompetitive effect cf these sorts exists is essential before a vertical merger is challenged. The other position denies that a vertical merger has the potentiality for economic ham £n the absence of hori- soot! effecu. To some of our members, it is wholly im- plausible that vertical integration p!-ces entering firms at a . @isadvantage, A seller who fails to minimize his input and Giswibation costs will be undersold by his competitors: he cannot afford to sell to or buy from an affiliate if there are more efficient alternative means of and distribution availabie to his competitors (and w Sim). Even if the selier is a monopolist, the desire to maximize profits will lead him w seek the most efficient methods of supply and @istribution, and there will be amplz2 opportunities for non~ affiliated suppliers and outlets to ccmpete for his patronage. Except in the case of the monopolist who cannot discrimi- sate in price effectively without co=1ol of his outlets, vertical will be initiated and maintained only if and 20 long as it is justified by the cost savings it permits. Bt & pot a method of Antitrust law has seemed to some a convenient weapon with which to attack large conglomerate mergers. Hf one interprets “elimination of competition”, “weciprocity”, and “foreclosuze™ as Chreats to competition, Sn ae hee Se merger of two large companies, however diverse their activities may be. These are often economic threat to mee do whe wpe oape pe gen he am a gag by manipulating the price of an unrelated commodity. The pe pee aleneaR cay Ubypehing petsry ayes anticompetitive. If entry into a fle?d is relatively easy, (ATRR) 6-10-69 however, these are a vast aum>er of potential entants and the elimineiion of one or a few bat ro effect, If entry is Cifficutt, a3 oaly a scizci jew ficms are capable of entry and on the ¢3cord likely w enter, their independ- ence should b@presezv2d. The identity of potential en- Gants should not be established by introspection. If the producer of X is truly a lixely entrant into the manufac- tue of Y, the likelihcod will have been revealed and confirmed by entrance into Y of other producers of X (here or abroad), or by the entrance of the firm into markets very similar to Y in eaumerable respects, We seriously Coubt wat the Anticu:t Divisioa should embark upon an active program of challenging conglomerate enterpsi:es on the basis of nebulous fears about size and ecoromic power, These fears should be either coafirmed or dissipated, and an important contri- bution would be mad= to this resolution by an early con- ference on the subject. If there is a geovine securities market problem, prebably new lecis'ation is necessary. If there fs a real policical threat in giant » then the critical dirmersion shcuid be estimated, If there is Qo threat, the fears enzertained by critics of the con- Blomerate enterprises should be allayed, Vigorous action on the basis of our prorent knowledge is not defensible. The central task of the Antitrust Division is to preserve competition in the American economy. This is a splendid and cha!" enging task and deserves and re- quires the full resources of the Division. We shall be much the losers if we compre-nise the of this central task by burdéaing the Division also with tasks such as the combatting of organized crime or the achievement of general political goals. The Use of Coxferences, We bave proposed that Conferences be used to revice the Guidelines and to ideati- SOO RAE Seep. wae te Re Seep enna The conference will allow the Antitrust poy gen Fn energie and bearings. We strongly recommend that before such con- ferences are held, leading students and exponents of par- ticular positions be asked to prepare position statements which present explicit and specific theories and evidence. Then the conference members will have specific questions to address and specific views to combat or support. D. Anticrust The cutting edge of law is not the abstract state- ment of a legal duty but the sanction provided for is Bonperformance, and hat is tue of the antitrust laws as of other systems of legal obligation, It is essential that thove laws clearly and accurately define and forbid the practices that impair competition and efficiency but it fs equally essential that ths sanctions for violation be effective in compellirg compliance and with a minimum of undesizable sids effects. In testing the antitrust sanctions by this standard, ft will be helpful to discinguish two purposes of sanctions: that of preventing (or, if it has already occured, undoing) @ specific violation; acd that of deterring violations that might not always be cszected, 6-10-69 | (ATRR) Sanctione of the first type--semedial sanction: -su féce where there & no problem of detection"(e.g., in the case of an illegal merger). But take the case of price-fixing. Price-fixing conspiracies can be, and one sucpect: are, Suc~ cessfully concealed. A sanction that merely prevented the continuation of the conspiracy, such as an injunction, or one that merely restored the losses of the -njured comumer:, such as ordinary , would im the-e circumstances probably be insufficient. For in deciding whether to comply with the law, a seller discount the very mode:t (or neg! gible} injury to him if his participation decrees that restore competitics rather than establish regulation, as well as assure that decrees do not remain in effect Jong after the relevant industr:al cond:tions have changed (such a: with the 1920 decree against the meat ‘Little is known of the extent to which a large number of pact decrees are st‘Ti operative, and if operative, of any real We recommend, therefore, L The past decrees still running should be compiled, and the types amd duration of prescribed conduct summar- ized. trust Division. The oldex (say 25 years and over) and obsolete younger decrees should be vacated. Antitrust Statutes Several legistative reform: could improve substant‘ally the functioning of the antitrust laws. We have recommended above 2 substantial increase in the maximum level of fines. 'p addition, we recommend immediate repeal of the Expe- diting Act. The low quality of many Supreme Court antitrust opinions can be traced in no small measure to the fact that drect appea? frequently require: the Supreme Court to pass on an extensive record without the benefit of the winnowing and focusing process involved in an intermediate appeal. The Supreme Court itvetf has noted that direct appeal is unsatis- factory. If repea' & politicaily imposible, then an amend- ment that would drawtically Limit the sumber of direct appeals would be desirable. E X-38 -@QNo. 413) The Webb-Pomerene Act should also be repealed. The creation of cartels in foreign commerce is ancithencal to the underlying theory of the Sherman Act, The danger that exempied cooperation between campeuters tn the ex- port field will lead to ‘legal cooperation at home ts too great.to be ~iewed as merely a povential abuse. Nothing U. S. domestic competition policy or foreign economic policy warranss the retention of this outmoded approach intemat:onal \ On die agenda fo: long-term legislative reform must be the Robinson Patman Act, The Ac* leads to mgidity in distnbution pattern: and to uniform, wnflexible pricing. In wd-stries with ‘ew sellers, price reductions are more likely to ve made if they can be made covertly. Such limited seductions often lead over time to generally lower prices. Thus, 2 prohibetion against price dizcrumination may pre- relax the enforcement of the Ac: as a desirable but, so ~ 294 6-10-69 (ATRR) long as private ueble damage actions are available, an wradequate reform. In reforming he Robinson-Patman Act, two kinds of amendment are desirable, First, the general prohibition against price discrimmation in Section 2a) should be made more supple by the meeting competition and cost justification defenses so as to make them more readily available for sellers whose price differentials do not stem from a predatory purpose and do not injure competition in the market place (as opposed to disadvantaging individual firms), Second, the more adsolutist brokerage, payments and services prohibitions of subsections (c), (d) and (e) should be repealed while making clear that the standards of amended subsection (a) semain applicable to practices that would previously have been treated under those repealed subsections. The Task — Force recognizes che political support that the Robinson Act retains in some quarters and the danger that an attempt some of our members view amendment of the Act as a long- jterm, albeit important, reform; others wish to leave it alone. o- 295 UNITED STATES DISTRICT COURT NORIHERN DISTRICT OF ILLINOIS EASTERN DIVISION UNITED STATES OF AMERICA, Plaintiff, CIVIL ACTION ve NO. 67 C 1632 ) ) ) ) ; GENERAL DYNAMICS CORPORATION; ) THE UNITED ELECTRIC COAL ) COMPANIES; end FREEMAN COAL ) MINING CORPORATION, ; ) Defendants. ANSWERS TO INTERROGATORIES OF THE DEVENDANTS Interropatory 1 Define the following terms or phrases as used in the complaint: . (a) “western Indiana" (Par. 7) Answer: “Western Indiana" is defined as approximately the western two-thirds to three-quarters of the State of Indiana. (b) “western Kentucky" (Par. 7) Answer: "Western Kentucky" is defined as approximately the western one-half of the Commonwealth Kentucky. 296 (c) "western Tennessee" (Par, 7) Answer: "Western Tennessee" is defined as approximately the western one-third to one-half of the State of Tennessee, (4) “eastern Missouri" (Par. 7) r: "Eastern Missouri" is defined as approximately i the eastern one-third to one-half and the south central portion )0£ the State of Missouri. (e) “eastern Iowa" (Par. 7) Answer: "Eastern Iowa" is defined as otpnmineashy the eastern one-half to two-thirds of the State of Iowa. (£) “southwestern and central Wisconsin" (Par. 7) Answer: "Southwestern and central Wisconsin" ig defined as approximately the entire State of Wisconsin with the exception of the eastern one-quarter to one-third of the State-which is situated to the west of take Michigan and with the exception of the northwest portion of Wisconsin which is situated to the south of Lake Superior. (g) "southeastern Minnesota" (Par. 7) Answer: "Southeastern Minnesota" is defined as approximate] the southeastern quarter of the State of Minnesota and includes, principally, the cities of St. Paul and Minneapolis and their environs. (j) “coal reserves thich can be recovered" (Par. 9) Answer: This phrase means coal reserves which can be mined, that is "recovered," under present and future technological capabilities. K ¥& * Interrogatory 6 Does plaintiff contend that there are other appropriate "sections of the country" (within the meaning of Sé@tion 7 of the Clayton Act) within which to test the legality of the challenged acquisitions of UEC stock? If so, specifically define each such area and state the facts and identify the data upon which plaintiff relies in supporting each such contention. Answer: The plaintiff does not at this time contend that there are other appropriate sections of the country within which to test the legality of the acquisition of UEC by GD. Interrogatory 7 With reference to Paragraph 8 of the Complaint, for each "section of the country" designated by plaintiff as "appropriate" in answer to Interrogatories 4 through 6, state which, if any, of the following fuels plaintiff contends do not compete with bituminous coal in such "section of the country" in "providing a dependable and low cost source of energy," and state the facts and identify the data upon which plaintiff relies in supporting such contention: (a) Gas (b) Oil (c) Nuclear energy (ad) Lignite (e) Water 298 Answer: The answer to this question is now being investigated by the plaintiff. However, the plaintiff directs the defendants' attention to the Keystone Coal Buyers Manual 1967, at pages 243-248, 250, 254-258, 269 and 273-274, and to the National Coal Association's Bituminous Coal Facts 1966, at pages 85-87 and 90. Inte atory 8 Does plaintiff contend that the "Eastern Interior Coal Province sales area" is an area anywhere within which coal mined at any location in the Eastern Interior Coal Province is able to compete with coal mined at any other location in the Eastern Interior Coal Province? (a) If so, state the facts and identify the data upon which plaintiff relies in supporting this contention. Answer: The plaintiff contends "that approximately 80 per cent of the bituminous coal consumed in the Eastern Interfor Coal Province sales area was produced in the Eastern Interior Coal Province." In support.of this allegation, the answer to . ; ¢ Interrogatory 3(c), above, is herein fully incorporated. : i (b) I£ plaintiff does not so contend, for each of : the mines in Illinois, Indiana and Kentucky listed in Appendix A, attached hereto, (1) Identify every other mine in the list . ‘with which such mine does or can compete, and the name and location of customers for which such mines do or could compete. . (2) Identi which fy every other mine in the list with such mine does not or cannot compete. (3) With respect to each mine in the list owned by Freeman or UE6, identify evéry other mine not included in the list with which plaintiff contends su [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_IA40386414_0099%3A04. Public record. Not legal advice.