# Appendix — United States v. Falstaff Brewing Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0111%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1973 - **Citation:** 410 U.S. 526 ## Text Supreme Court of the United States Ocroszen Tax, 1971 No. 71-873 Unrren States or America, APPELLANT, v. Fatstarr Brewirnc CorporaTION AND NarracansetTt Brewrxe Company =? ON APPEAL FROM THE UNITED STATES DISTRICT _ COURT FOR THE DISTRICT OF RHODE ISLAND INDEX f q 992 Relevant —::!. , ̃ ia rpg ars 1 Oe omplaint by the United States, filed July 13, 1970. 3 d “Answer of Falstaff Brewing Corporation, filed %% 00000 06 8 ‘Stipulation between the parties, approved by the dis- triet court, and filed August 16, 1965 ........... 11 3 N of the action held before the Hon. Edward W. Day, United States District Judge for the District ; pA of Rhode Island, commencing October 6, 1970, at Providence, Rhode Island: P atten. METEEEE 13 Transcript of the proceedings ............... 16 Transcript of proceedings held before the Hon. F 4 Edward W. Day, United States Distriet Judge for he District of Rhode Island, on October 7, 1970: K „ö 91 oe e . she weer, of proceedings held 1 9 the Hon. : Testimony of Alvin Kacin—direet—[41) . — —eross —[62] ...... Testimony of Moran J. Thomas direct [67] Testimony of Ira Horowitz direct [744 Transcript of proceedings held before the Hon. Edward W. Day, United States District Judge for the District of Rhode Island, on October 9, 1970: RR eg ae ee ee ee ae ree “Testimony of Ira Horowitz (resumed)— direct—[1] ...... —cross —[40] ...... redirect [833 (Despite the fact there are no pages 90 through 99, this is a clerical error and no pages are missing.) Testimony of Joseph Griesedieck— direct—[101]...... Transcript of proceedings held before the Hon. Edward W. Day, United States District Judge for the District of Rhode Island, on October 13, 1970: „% ̃ᷣüͤPâ — .. 0 6 6b Sow ans on of Joseph Griesedieck (resumed) —direct—[7] ...... ——cross —[34] ...... Transcript of proceedings held before the Hon. Edward W. Day, United States District Judge for the Distriet of Rhode Island, on October 14, 1970: %% P ³ Ay „% 1 of Carl W. Haffenreffer —direct —- [] Seross in ‘ United States District Judge for | Island, on October 8, 1970: 294 GX 3B, p. 8 (3rd 9) GX 30, p. 5 (5th ff), p. 6 (1st and 2nd s) GX 3D, p. 6 (3rd 1), p. 7 (1st 1) GX 3F, p. 10 (3rd and 4th Is), p. 11 (Ist, 3rd, 4th and 5th fis), p. 12 (Ist ), Att. C 7 GX 5, pp. 1-6,.10, 13, 14 (except last f) KX 10, p. 1 (II, 3rd sentence), p. 5 (70 Ath and 5th Js), Pp. 6, p. 9 (16), p. 10, p. 11 (1st and 2nd Is), p. 13 (Js 1 and 2), pp. 14-16, p. 31 (Js 2 and 3), p. 37 (Js 1 and 2), p. 41, p. 42 (2), pp. 45-46 p. 47 (Ist and 2nd fs), pp. 65-66, pp. 67 (except last [), p. 92, p. 93 (except that portion of page 93 under the caption “Bottling and Distribu- tion:); p. 97 (4th and 5th fis), pp. 98-99, p. 107 (4th and 5th Js), p. 108 Defense exhibits: DX A (p. 1, 14), pp. 11-12, p. 13 — material A OE RR T ĩ⅛ Ü——ſŹõJVo½e denn ® 1 576 iv Dx Linsssentisnadepetnaniactensearsens — * 5 2 4 4 * Notice af sppeal fled by the United Staten en Des, grey ill ber 3, 1971 .. „„ „„ —* * ‘ ‘Supreme Court’s Order of February 28, 1972, noting ng, UNITED STATES DISTRICT COURT Fon THE DISTRICT OF RHODE ISLAND Unrren States or Au, ; PLAINTIFF, om v. Farstarr Barw]m o CoxroraTion AND Nazeacansett BN] N Compary, DEFENDANTS., RELEVANT DOCKET ENTRIES Date 1965 July 13 . Complaint filed. Plaintiff’s Motion for Temporary Restraining Order filed. 1 Motion For Preliminary In junction ed. 14 Hearing on Injunction held. William J. Elkins, Esq., (Dept. of Justice) Anti Trust Division, barer er D.C. Presents Motions for Tem- Order and For Preliminary Injunction. Court to treat the instant matter as a hearing on Govt’s motion For Preliminary Injunction. Court proceeds to decision. Motion denied. Motion For Preliminary Injunction filed. 20 ORDER entered and filed denying Pitff’s mo- tion for a preliminary injunction against Deft., Narragansett Brewing Company. Aug. 3 Defendants’ Motion, Narragansett Brewing Company, to Dismiss the Complaint, etc. filed. 9 Answer of Defendant Falstaff Brewing Corpo- ration filed. Stipulation re Falstaff as subsidiary, etc. ap- JUDGMENT entered and fled for Deft, Nar- (1) 2 ragansett 8 Company : and complaint i is e as cee Gort Bests its affirmative case subject to re- war eee Trial continues. - Trial continues. Deft. rests. No rebuttal. Opinion filed. JUDGMENT entered and filed in favor of Deft. Falstaff dismissing complaint. Notice of Appeal to the Supreme Court of the ee States by the United States of America Deft-Appellee’s Request to certify and transmit the record to the U.S. Supreme Court filed. Record on Appeal together with certified copy of docket entries mailed to Clerk, Supreme Court of the United States, Washington, D. C. we ED UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND v. Civil Action No. 3523 Filed: July 13, 1965 Nazracansett B] NG Compary, DEFENDANTS.) - COMPLAINT 2 e United States of America, by its attorneys, acting under the direction of the Attorney General of the United brings this civil action to obtain equitable relief against the defendants, and complains and alleges as fol- lows: 1 a JURISDICTION AND VENUE 1. This complaint. is filed and this action is instituted against the defendants under Section 15 of the Act of Con- gress of October 15, 1914, as amended, (15 U.S.C. § 25), commonly known as the Clayton Act, in order to prevent and restrain the violation, as hereinafter alleged, of Sec- tion 7 of said Act, (15 U.S.C. § 18). 2. Narragansett Brewing Company has an office, trans- acts business and is found within the District of Rhode Is- N II DEFENDANTS 3. Falstaff Brewing Corporation (hereinafter referred to as Falstaff) is named a defendant herein. Falstaff is a corporation organized and existing under the laws of the State of Delaware, with its principal office located in St. 4. Narragansett Brewing Company (hereinafter referred to as Narragansett) is named a defendant herein. Narra- gansett is a corporation organized and existing under the 3 7 laws of the State of Rhode Island, with its e pal office located in Cranston, Rhode Island. III TRADE AND COMMERCE - 5. The production of beer on a commercial scale was reinstituted in the United States on December 5, 1933, fol- lowing the adoption of the twenty-first amendment to the Constitution. In the fiscal year ending June 30, 1935, there were 750 breweries operating in the United States produc- ing 42,782,376 barrels of beer. Through merger, consolida- tion and natural attrition, the number of breweries has de- creased so that by June 30, 1964 there were 204 breweries producing 103,017,915 barrels of beer annually. The share of beer sold by the top ten brewing firms in the United States has increased from 39.2 per cent of the market in 1951 to 56.8 per cent in 1963, while the share of the top twenty-five firms has increased from 57.5 per cent to 82.2 per cent. 6. Defendant Falstaff is the fourth largest brewing com- pany in the nation in the terms of barrels sold. In 1964 Falstaff produced and sold 5,819,659 barrrels of beer which accounted for approximately 5.90 per cent of all beer sales in the United States. In 1964 Falstaff had sales of $139,464,822 and net earnings of $7,035,631. Its 1964 assets were $31,077,708 Falstaff currently produces but one brand of beer and that is sold under the trade name “Fal- staff”. It produces its beer in eight breweries which are lo- cated at Omaha, Nebraska; New Orleans, Louisiana; St. Louis, Missouri (2 breweries); San Jose, California; Fort Wayne, Indiana; Galveston, Texas; and El Paso, Texas. In the course of its business Falstaff produces beer in said breweries and sells substantial quantities of beer in inter- state commerce. 7. Falstaff 33 distributed in 32 states and the District of mbia. Falstaff beer is not currently dis - Kn ds men ‘arenof the United States. 8. Defendant Falstaff ae steadily expanded its produc- des, axles and marketing atta through acquisitions of local and regional ' breweries.’ Since’ December 1952 it ‘has ao quired the we on the dates indicated : 5 «(a) Pacific Brewing & Malting Co. San Jose, California _ —December 1952 : — r (d) Berghoff Brewing Co. Fort Wayne, Indiana— Leased in 1954 and purchased in 1964 (c) Galveston-Houston Breweries, Inc. Galveston, Texas March 1956 (d) Mitchell Brewing Co. El Paso, Texas—April 1956 (e) Griesedieck Bros. Brewing Co. St. Louis, Missouri December 1957 In addition, in June 1961 Falstaff acquired malting facili- ties from Albert Schwill & Company of Chicago, Illinois, and in May 1964 Falstaff acquired malting facilities from Columbia Malting Co. of Chicago, Ilinois. 9. Sales figures in the New England market reflect the national concentration in the production of beer. In Massa- chusetts, for example, five companies account for over 60% of beer sales. 10. Defendant Narragansett is the largest seller of beer in the New England States with sales of 1,264,756 barrels accounting for about 21% of all New England beer sales. It is the twenty-first largest producer and seller of beer in the United States and accounts for approximately 1.29 per cent of all beer sold. The total dollar ‘sales of defendant N tt in 1964 was $37,431,428 and its net income was $713,083, Its current assets are valued at $17,950,365. Narragansett owns and operates a brewery located in Cranston, Rhode Island. Narragansett markets its beer under the trade names “Narragansett”, “Croft”, “Han- ley”, “Krueger”, “Ambassador” and “Haffenreffer”. De- fendant Narraransett in the course of its business pro- duces beer in Rhode Island and sells substantial quantities of beer in interstate commerce, principally in the New England States. 11. Falstaff is a likely entrant and a potential competi- tor in the New England market. Furthermore, Falstaff is the most substontial and probable of the potential entrants into the concentrated New England market. IV OFFENSE CHARGED 12 On May 26, 1965, Narragansett and Falstaff executed _ contract entitled, “Agreement Pursuant to Plan of Com- Liquidation” under which Falstaff will acquire the and Narragansett will be liquidated © on or about July 15, 1965. The agreement provides that Falstaff will pay Narragansett 617, 500,000 cash and $2,000,000 in Falstaff common stock and will assume the debts and liabilities of Narragansett. 13. By this acquisition a substantial and likely entrant into @ concentrated market acquires the leading company in that market. The effect of this acquisition may be sub- stantially to lessen competition or to tend to create a mo- nopoly in the production and sale of beer in the United States and within certain sections thereof, in violation of : N 7 of the Clayton Act, in the following ways, among others: a (a) Potential competition in the production and sale of beer between Falstaff and Narragansett will be elim- inated; (b) Potential competition in the production and sale of beer generally may be further substantially less- ened; (e) Industrywide concentration in the produetion and sale of beer in the United States will be further in- creased. The offense alleged in this complaint will occur unless the relief hereinafter prayed for is granted. PRAYER WHEREFORE, plaintiff prays: 1. That the proposed acquisition described in paragraph 12 of this complaint be adjudged a violation of Section 7 of the Clayton Act. 2. That a temporary restraining order and a preliminary injunction issue enjoining the defendants, their officers, directors, agents, employees and all other persons acting on their behalf from taking any further action to consum- mate the acquisition agreement, or any similar agreement, understanding of plan, and from making any changes di- rectly or indirectly with respect to the common stock or in respect to the corporate structure or properties of defend- ant Narragansett, pending adjudication of the merits of 5. That order be made and entered herein requiring defendant Fal- to be brought before this Court in this proceeding, and directing the Marshal of the Eastern District of Mis- 6. That plaintiff have such other and further relief as the nature of the case may require and the Court may deem just and proper. 7. That plaintiff recover the costs of this action. Dated: Nicol As DRB. Litniiacn WILIAX J. ExxINS Attorney General Attorney, Dept. of Justice Doxal F. Turner Assistant Attorney General Gorpon B. Sprvack 1 Joun J. Gal dar Attorneys, Dept. of Justice Raymonp J. Perrine United States Attorney ~ UNITED ‘STATES DISTRICT COURT - YOR THE DISTRICT OF RHODE ISLAND 1 N | PLAINTIFF, Reid es oS Go le er re rer Givit Action No. 3523 Farstarr Baewre 8 Filed: ne 1965 NarraGansetr Brewrne Company, ANSWER OF DEFENDANT FALSTAFF nun CORPORATION First Defense The Complaint fails to state a claim against this defend- ant on which relief can be granted. Second Defense Answering the numbered paragraphs of the Complaint, this defendant gays: 1. It admits that the Complaint purports to be filed and this action instituted under Section 15 of the Clayton Act to restrain what is alleged to be a violation of Section 7 of said Act but denies that the Complaint sets out any viola- tion of said section and denies that this defendant commit- ted any such violation. 2. It admits that Narragansett Brewing Company, the name of which is now Naiagans Incorporated, has an office in the District of Rhode Island and denies each and every other allegation of paragraph 2. 3. It admits the allegations of paragraph 3. 4. It admits the allegations of paragraph 4, except that it says that the name of Narrangansett Brewing Company is now Naiagans Incorporated. 5. It is without sufficient knowledge or information to sven thee Peat terre or uel i gra 6. It admits the allegations of paragraph 6. 7. It admits the allegations of paragraph 7. 8. It admits that since December 1952 it has acquired ee ee we ahoet te ea i ‘Columbia Making Com- pany of Chicag „ Illinois but denies that said facilities ‘were facilities and says that they were storage fa- , Silities ich have been and are now used only as such by 95 ‘this defendant. It denies each and every other allegation of ph 8. 9. It has no information or knowledge sufficient to form a belief as to the turth of the allegations of paragraph 9. 10. It denies the allegations of paragraph 10. 11. It denies the allegations of paragraph 11. 12. It admits that on May 26, 1965 it executed a contract with Narragansett Brewing Company entitled “Agreement Pursuant to Plan of Complete Liquidation” and denies each and every other allegation of paragraph 12. 13. It denies each and every allegation of paragraph 13. Wherefore this defendant prays that the Complaint be dismissed. 41 By its attorney Warren F. Farr MartrHew W. Gonrxvo Ropes & Gray Hinckley, Allen, Salisbury & 50 Federal Street Parsons Boston, Massachusetts 2200 Industrial Bank Building Of counsel Providence, Rhode Island 10 CERTIFICATE 3 , ar August 9, 1965 I, Matthew W. Goring, attorney for all defendants herein, hereby certify that I have this day served the fore- going Answer by mailing a copy thereof, postage prepaid to Raymond J. Pettine, Esquire, the United States District Attorney for the District of Rhode Island, U. S. P. O. and Court House Building, Providence, Rhode Island, and to W. J. Elkins, Esquire, Department of Justice, Anti-Trust Division, Room 1706, Post Office Building, Boston, Massa- chusetts, the attorney of record for the plaintiff. /s/ (Mathew W. Goring} UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND Unrrep States or America, J PLAINTIFF, v. Civil Action No. 3523 Falsrarr Brewrxa Corporation anp| Filed: Aug. 16, 1965 NaRRAGANSETT Brewine Company, DEFENDANTS. STIPULATION Subject to the approval of the Court, plaintiff United States of America and defendant Falstaff Brewing Corpo- ration (“FALSTAFF”) hereby stipulate that unless other- wise ordered or permitted by this Court, FALSTAFF will: 1. Conduct the business acquired from defendant Narra- gansett Brewing Company, a Rhode Island corporation organized in 1891 (“NARRAGANSETT”), in a separate wholly-owned subsidiary of FALSTAFF; 2. Not permit such subsidiary to dispose of any plants, real estate, structures, equipment, or other physical capital assets acquired from NARRAGANSETT which are used in the conduct of its business, except in the ordinary course of such business ; 3. Cause such subsidiary to use its best efforts to retain the system of distribution acquired from NARRAGAN- SETT in substantially its present form; 4. Cause such subsidiary to retain the brand name “Nar- ragansett” and (subject to the terms of the License Agree- ments relating thereto) the brand names “Haffenreffer” and “Krueger”, and to continue distributing beer under such brands in all areas wherein they are now sold in sig- nificant quantities ; 5. Cause such subsidiary to use its best efforts to retain NARRAGANSETT’S normal volume of sales of beer = the brand names set forth in paragraph 4 above; an 6. As soon as such date has been decided upon, notify the plaintiff of the date on which it intends to begin pro- duction at any plants acquired from NARRAGANSETT of 12 any beer to be sold under brand names other than those ac- quired from NARRAGANSETT in competition with beer 88 brand names acquired from NARRAGAN- FALSTAFF BREWING CORPORATION By /s/ Marnew W. Gortne UNITED STATES OF AMERICA By /s/ Joun J. Gateay Attorney, Department of Justice By /s/ Raymonp J. Petrinz United States Attorney Approved: /s/ Evwarp W. Day United States District Judge Dated: August 16, 1965 IN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF RHODE ISLAND Unrrep States or AMERICA v. C. A. No. 3523 Fatstarr Brewrne Corporation. AND Befor his Honor, Chief Judge Day Tuesday, October 6, 1970 APPEARANCES: For the Government: Philip F. Cody, Esq. Bruce Repetto, Esq. Kenneth A. Sagat, Esq. Department of Justice Antitrust Division For the Defendant: Hinckley, Allen, Salisbury & Parsons; Matthew W. Goring, Esq. of counsel. James McClellan, Esq. and Jerome M. McLaughlin, Esq. St. Louis, Missouri INDEX For In Government’s Exhibits iden. evid. No. 1 Copy of stipulation in Civil Action No. 3523, United States of America v. Fal- staff Brewing Corporation 6 2 Copy of interrogatories to be answered by Defendant, Falstaff Brewing Corpo- ration and Answers by said Defendant, in Civil Action No. 3523, United States of America v. Falstaff Brewing Corpora- K tion (a) Annual report of Falstaff, 1955 (b) ” ” ” . 1960 (e) ” 7 ” ” 1961 14 INDEX. (Continued) n” ‘ E ” 1 1964 a Copy of letter to Mr. Philip F. Cody, Antitrust Division, U.S. Department of Justice, from Willson, Cunningham & McClellan, enclosing copy of agreement between Falstaff and Narragansett, dated May 26, 1965 and copy of instrument of conveyance, dated July 15, 1965 Copy of Falstaff Brewing Corporation Notice of Special Meeting of Stockhold- ers and Proxy Statement, June 18, 1965 Copy of Supplemental Interrogatories to be answered by Defendant Falstaff Brewing Corporation and Answers by said Defendant, in Civil Action No. 3523, United States of America v. Falstaff Brewing Corporation Copy of article in ADVERTISING AGE, March 2, 1964, entitled “Falstaff to Launch $2,000,000 Drive in California March 2” Copy of document entitled “PROJECT X Analysis Survey, February 26, 1962” Copies of letters from various distribu- tors in New England to Falstaff Brewing Corporation, and replies by Falstaff Brewing Corporation, 1960-1965 Copy of report of Arthur D. Little, Inc. to Falstaff Brewing Corporation, dated April 12, 1960 Copy of press release from Falstaff Brewing Corporation, October 10, 1963 Falstaff Brewing Corporation press re- lease, June 4, 1961 Copy of Summer 1961 edition of “The Falstaff Shield” 2 10 14 15 18 15 INDEX (Continued) For In Government’s Exhibits iden. evid. No. 14 Copy of Fall 1961 edition of “The Fal- staff Shield” 116 15 Copy of Falstaff Brewing Corporation press release, February 16, 1962 117 16 Copy of March-April edition of “The Falstaff Shield” 117 17 Copy of document entitled “Brewing’s Bright Future’—Remarks by Joseph Griesedieck at panel discussion before New York Society of Security Analysts, October 16, 1964 118 TUESDAY, OCTOBER 6, 1970 10:07 A.M, : ; [17] Tun Cuzex: United States of America: v. Falstaff Te Court: You ee 8 f Ma. Jonnsron: If the Court 1 for the 0 may I introduce to the Court the three attorneys from the De- partment of Justice who, I am sure, the Court has met pre- viously, Mr. Philip Cody, Mr. Bruce Repetto, and Mr. Ken- neth Sagat, who will try it on behalf of the United States Government? Mn. Gonma: If the Court please, may I formally intro- duce to the Court my colleagues from the Bar of Missouri: Mr. James McClellan on my left, Mr. Jerome McLaughlin on my right? They are general counsel for the defendant.. Tun Court: Very well; you may proceed. Mr. Copy : Good morning, your Honor. May I take perhaps one minute just to speak with de- fense counsel about a matter that came up just this mo- ment? Tue Court: Certainly. (A pause) [18] Tun Covar: Go right ahead. Mn. Copy: Thank you, your Honor. This case involves basically an alleged violation of Sec- tion 7 of the Clayton Act. It involves the acquisition by the fourth largest brewing corporation in the United States in 1964, the acquisition having taken place in 1965. Tue Court: It took place in 19651 Mn. Copy: The acquiring corporation was a +; tt che Government will show this—and a resourceful brewer. 4 —— the most potential competitor to so-called brewers. Even though at the time it was a re- gional, it was the most likely to become a national. And the Government will also show that the corporation and its of- ficers were aware of that fact. The acquired ner, 17 in this complaint i is that Falstaff, the defendant, was a po- tential competitor, the most potential entrant,— Tre Cover: Most potential? Mn. Copy:—into a concentrated industry. It had [19] shown constant growth in geographic expansion. It had . demonstrated constant corporate interest over at least five years— Tue Covrt: It had done what, demonstrated what? Mn. Copy : Corporate interest. Txe Covnr: Corporate interest? Mr. Copy: Yes.—over at least five years in entering the Northeast, including New England. In fact, the Govern- ment’s proof will demonstrate that Falstaff announced a gnawing desire to be a national seller. This was to meet the competition of national sellers whom they competed against in their own regions and also to achieve the advan- tages of being a national seller. So it was offensive and protective. Of the top ten brewers in the nation only three did not sell throughout the nation. We will be able to show that Falstaff of these three was the most potential. The New England market was characterized by a high concentration of sales among a small number of brewers. We believe that in this type of situation a new entrant could have prompted competition. However, Falstaff did not choose to prompt competition. Falstaff set out to ac- quire a leading brewer in a concentrated market. It did not seek a toehold entry. It did not seek an entry by which it might have grown over a number of years in this market. [20] Instead, it sought to acquire the leading brewer in this market, a concentrated market. Falstaff, being the most likely entrant, was certainly the most likely source of | pro competition in this market if it had entered in a way other than by acquiring the leading brewer in the market. 5 Pn dur proof. Tun Count: Very well ; Mr. Copy: I believe jurisdiction and venue regarding 18 this action have been more or less settled by the pleadings Te Court: There is no question as to jurisdiction and venue, is there, Mr. Goring? Mn. Gone: Jurisdiction and venue are not challenged. Tue Cover: I thought not. Mr. Copy: Will it be necessary. then, your Honor, to enter the complaint and answer as exhibits! TR Court: They are part of the case. They are already here. You mean as exhibits? Mn. Copy: Yes. a TRA Court: No, I think not. Mn. Copy: The line of commerce— Tue Court: Line of commerce? i Mn. Copy: Yes.—is a significant factor in a Section 7 case. In this particular case the line of commerce [21] has been stipulated to. Tae Court: Stipulated? Mr. Copy: And that is simply the production of beer. In support of that I would offer to mark for identification an order filed 2/12/69—a stipulation; I am sorry—a stipu- lation filed 2/12/69 relating to the stipulation as to line of commerce and various other data. Tae Court: You are offering it, as you say, as an ex- hibit for identification? Is that what you said? Mr. Copy: Yes, sir. Mn. Gontxo: That stipulation is a part of the official rec- ord, your Honor. Tze Court: Let's mark it then as—it is in the record, is it, Mr. Goring? Mn. Gore: It should be. Tn Court: Among the papers? Mn. Gonrxe: It should be. Mn. Copy: If it is in the record, I will withdraw it. Tar Count: If it is in the record, it need not be Well, you can have it—Let it be marked as an exhibit, Exhibit 1. It will be clearly a matter of record. Mr. Copy: Government’s Exhibit 1. (Copy of stipulation in Civil Action No. 3523, United States of America v. Falstaff Brewing Corporation, marked Government's Exhibit 1) Mr. Copy: I would now like to offer Government’s Ex- 19 Tun Court: It has been marked as a full exhibit. Mn. Copy: Oh, I see, your Honor. I understood perhaps we might have to mark it for identification first and for ad- mission next. Tue Court: No, I don’t think so. We will do it in one fell stroke—A full exhibit. Mr. Copy: That cuts our time in half. TRR Court: Beg your pardon? Mr. Copy: That cuts our time in half. Falstaff was in the business of brewing beer before pro- hibition. I believe it was the first brewery to acquire a li- cense to brew beer after the repeal of prohibition. It has over 31 years of brewing experience. And in 1964 it was sold not only in the United States but in 35 foreign mar- kets as well. T Court: Sold where, in what? Mr. Copy: In 35 foreign markets, your Honor. T Court: I take it these are to be matters of proof. Mr. Copy: I will cite the proof. TRR Court: What is that? Mn. Copy: I will cite the proof. Tue Court: I understand you will offer evidence of these allegations, these statements you are making. [23] Ma. Copy: Yes, sir. I will cite them within one min- ute. It was a distributor for a foreign beer in at least 30 states. Its management was aggressive. It was or it did consider itself as a front runner in the industry, an inven- tor in packaging, a leader in quality control, an effective advertiser, a researcher, and a developer of improved dis- tribution practices. In short, Falstaff was by no means a stagnant company. It was a progressive corporation, fourth largest in its field in the nation. In support of this I offer as Government’s Exhibit 2 in- terrogatories filed November 10, 1965 and answers thereto. Mr. Gone: I believe those are part of the record. TRR Court: Now, gentlemen, customarily in a trial of a case if it is sought to introduce interrogatories, the ques- tions and answers are read into the record. But if you gen- tlemen want to stipulate that these interrogatories and the answers thereto may be offered by way of an exhibit which will make them a part of the record, I don’t have any per- » 8onal objection to it. 20 W er ee eee ee ion, your Honor. Mn. Copy: No objection, fia Tun Court: ee eee and oo time. Let's mark that Exhibit 2. [24] Those are dated November 10, 19651 Tan Gann: Filed Nemmsber 10,1960, and answers there- 8 Very well. (Copy of Interrogatories to be Wers by Defendant, Bi Corporation and Answers by said De- fendant, i in Civil Action No. 3523, United States of Amer- ica v. Falstaff Brewing Corporation, marked Government's Exhibit No. 2) Mr. Copy: In further support of our contentions we will introduce the 1955 annual report, 1960, 1961, 1962, 63, and 64 annual reports of the Falstaff Brewing Corporation. Tue Court: Those reports are submitted to stockholders or to some agency, or what? Mx. Copy: They would be submitted, I assume, your Honor, to the Securities and Exchange Commission and to shareholders and would be made available to the general public through various outlets. Mn. Gonmo. That is correct. Tun Court: There is no objection, I take it, Mr. Goring? Mr. Gone: None, your Honor. [25]... Tue Court: Exhibit 3. Mn. Copy: Will they be marked separately, your Honor? Tue Ctanx: 1955, 3(a); 1960, 3(b); 1961, 3(c); 1962, 3(d); 1963, 3(¢) ; and 1964, 3(f). (Copies of annual reports of Falstaff Brewing Corpora- tion for 1955, 1960, 1961, 1962, 1963, and 1964 marked Gov- ernment’s Exhibits 3a), 3(b), 3(¢), 3(d), 3(e) and 3(f), respectively) 75 Mn. Cobr: There are: sections in each dtm relevant to cach af the aubjects that I have discussed, but to reed them, I think,— Tun Covnr: A little louder, please. «Me G e read them: would “unduly burden te Tas Covar. I don’t want to read any more than I have to. 21 to. You can be sure of that. Are there any particular sec- tions you want to specify? Mn. Copy: No, your Honor. ‘ee ek ~ Tue Court: I will leave it to counsel to point out the pertinent sections before we finish here. Mr. Copy: I would rather they be considered in total. Tun Courr: They might be, but the time element is a factor here. I don’t want to read surplusage. It would be of no help to me. Mn. Copy: In 1964 Falstaff had culminated or was in 126] the continuance of, shall I say, a growth of constant expansion in terms of plants, capacity, and sales? I believe our pre-trial brief shows that from 1960 through 1964 Fal- staff’s sales increased from 115.9 or so million dollars to about 139.4 million dollars. Its barrel sales had risen by nearly a million barrels. TRE Court: That is in a period of five years? Mr. Copy: Yes, sir. Fortune magazine rated Falstaff as the 375th largest industrial corporation in terms of sales in the entire country. As I mentioned before, it was the fourth largest brewer. Its sales territory covered 32 states. Tun Court: These are representations of facts which, I assume, will be supported by evidence. Mn. Copy: I will give citations for them momentarily, your Honor. Tue Court: Very well, I just wanted to make certain you have evidence in support of these statements. MI. Copy: Very good. Tue Court: Or a stipulation by the parties as to their existence. Mn. Copy: Over the period its sales had increased 80 percent; its net earnings, by 51 percent; and its working capital, by 152 percent. I will cite to your Honor in support of these statements [27] the 1961 report already in evidence as Government’s — 3(c), pages 4 and 5; its 1964 report in evidence as Tue Court: 3(a) ! Mn. Copy: 3(f), your Honor. —particularly there is a 10-year summary in that annual report and that is more or less specifically what we are thinking about. I Qwould also cite to your Honor page 1 of that report, 3(f); also, to the stipulation: in this action in evidence as Exhibit 1, paragraph 18 and paragraph 2. In short, your Honor, Falstaff was not in any sense Tue Cover: Was not what, please? Mr. Copy :—in any sense whatsoever a failing company or even a company that was faltering. It was a growing ag- gressive regional brewer, eager to expand, as we shall show later. Mz. Gore: May I call the attention of the Government to the fact that at one point in the taking of depositions, which were taken by Mr. Farr, were taken by the Govern- ment attended by Mr. Farr in his lifetime, Mr. Farr con- ceded that this was not a failing company situation. Te Court: Who is Mr. Farr, your predecessor? Mn. Gonrwo: Mr. Farr was counsel of record for Falstaff in the early stages of this case. TI Court: He is now deceased, I take it. 128] Mr. Gornva: That is correct. Mn. Copy: J recall that, your Honor. But it was by no means a faltering corporation. It was a growing, expand- ing young corporation with, from what we have seen, excel- lent management and potential for growth. And as we will point out, that growth was, first of all, of a geographic na- ture; and, second of all, directed precisely to the Northeast and to New England. 5 And I would point out to the Court that New England has been stipulated to as a relevant geographic market in which to measure the effect of this acquisition, and that in- eludes the states of Connecticut, Rhode Island, Massachu- setts, Vermont, Maine, and New Hampshire. In connection with the acquisition itself I would like to mark for idenf*fication—place into evidence a document covered by a letter from Willson, Cunningham & McClellan entitled “Agreement Pursuant to Plan of Complete Liqui- dation,” and also an attached instrument of conveyance dated July 15, 1965, sent under the same cover. Mr. Gorme: Refresh my recollection, Mr. Cody. That was one of the designated documents? MX. Copy. Tes, it was; | Mn. Gorrne. I have no objection to it being marked as a full exhibit. e eee t Tun Court: It is entitled, for the record, Agreement {29} Pursuant to Plan of Complete Liquidation.” Is that it? Does it bear a title, gentlemen? Tae Cuzex: It is a letter of December 15, 1969, enclosing copy of agreement between Falstaff and Narragansett and copy of instrument of conveyance dated July 15, 1965. Tn Court: It may be marked Government’s 4. Mn. Copy: We have certain clips, your Honor. Tue Court: I can’t hear you. Mr. Copy: We have a master set where we have certain clips in them. By mistake I offered the clipped set. Tae Court: Government’s Exhibit 4. (Copy of letter to Mr. Philip F. Cody, Antitrust Divi- sion, U.S. Department of Justice, from Willson, Cun- i & McClellan, enclosing copy of agreement be- tween Falstaff and Narragansett, dated May 26, 1965 and copy of instrument of conveyance dated July 15, 1965, marked Government’s Exhibit No. 4) Mr. Copy: We believe that the major harm in this ac- quisition comes not from Falstaff’s entry into New Eng- land. Certainly in a concentrated market such an entry would be -welcome. The question becomes how it enters. Innstead of taking alternatives Falstaff entered by acquir- ing the No. 1 brand in New England, the 21st largest brewer in the United States, a brand that had 65 percent of the Rhode Island [30] This again was not a case of a fal- tering company. Its dollar sales in 1960 were 26.4 million. These rose in 1964 to 38.3 million. Its barrel sales rose or less than 900,000 in 1960 to well over 1.2 million by In support of this contention the Government cites the stipulation already entered in evidence as Government’s Exhibit 1, paragraphs 1, 2, 3, 4, and 7. And it also cites in support of this the Falstaff Brewing Corporation notice of special meeting of Stockholders and proxy statement, dated June 18, 1969—1965; I am sorry—signed by Harry J. Pettey, Secretary, as Government’sexhibit. Tue Court: It may be marked Government’s Exhibit 5. (Copy of Falstaff Brewing Corporation Notice of Spe- cial Meeting of Stockholders and Proxy Statement, June 18, 1965, marked Government’s Exhibit No. 5) Mn. Copy: In the same connection we will direct your Honor’s attention to answer to interrogatory No. 11. 24 T Court: Answer to interrogatory No. 111 Mn. Copy: Correct. And also answers to supplemental in- terrogatories 1 and 2. edt ' 5 e RR eee geg of the Honor. 15 shops e e 2 1 13 uk 1311 Te Covar: But I say are those questions and an- swers in evidence as exhibits as yet! N Mn. Conr: No, I am sorry; they are not, your Honor. May I move that the answers of defendant Falstaff Brew- ing 8 9 8 to supplemental interrogatories of the Mn. Gortna: Mr. Cody, those two interrogatories and the answers thereto are a part of this record because I filed Ma. Copy: All right; if that is so stipulated. Tne Court: They are in the pleadings of the case. But we did, did we not, permit you to file copies of other ques- tions and answers as an exhibit, Exhibit 2? Mn. Copy: Yes, your Honor. : Tun Court: I think we ought to be consistent so when it comes time to go through the record of this case for the purpose of writing an opinion, I don’t have to be searching everywhere. If we adopt a pattern, it seems to me we ought to follow it. F Mn. Copy; All right; very good. I move that Govern- ment's supplemental interrogatories to be answered by the ere. in this action, dated 4/12/66, and the answers ereto,— TA Court: These are supplemental interrogatories you are talking about now? Mr. Copy: Yes, your Honor. (32] THe Cover: Questions 1 and 2. What was the other one? Mr. Cony: 3, 4, and 7. I wonder, your Honor, would there be any objection to entering the entire interrogatories and answersasanexhibit? §=— fF ve Mn. Gone: None whatever. Tue Court: Government's Exhibit 6. ime Mr. Copy: By pointing out the particular interrogato- ries, your Honor, I only directed your attention to the most relevant ones. All, however, we believe are relevant and we will rely upon them. So that is why I requested that the en- tire interrogatories and the answers thereto be taken as one piece of evidence. * inst Tue Covet: Ordinarily pertinent parts of questions and answers to interrogatories are read into the record. But if there is no objection by counsel and you want to leave it that way, I will permit the introduction of the entire sets of interrogatories. . se Mn. Gorrna: I am indifferent on that point. Tun Counr: Very well; it may be marked Government’s Exhibit 6. 6 (Copy of Supplemental Interrogatories to be Answered by Defendant Falstaff Brewing Corporation and Answers by said Defendant, in Civil Action No. 3523, United States of America v. [33] Falstaff Brewing Corporation, marked Government’s Exhibit No. 6) ‘Tue Court: I take it in the memoranda the particular interrogatories and the answers thereto will be stressed by _ counsel. : Ma. Copy: Yes, your Honor. would also for the record commend to your Honor’s at- tention interrogatory 11, as well as the answers to supple- mental interrogatories 1 and 2. ‘Tue Covet: You have already done that, haven’t you? My notes indicate— Mn. Copy: No, your Honor, I don’t think I did. Tun Court: My notes indicate a few minutes ago you called my attention to the answer to interrogatory No. 11. Then you referred to supplemental interrogatories Nos. 1, 2;'3, 4, and 7, and the answers thereto. Is this something additional ? Mr. Copy: To set the record straight I meant to refer to stipulation 1 and 2. Tux Court: Stipulation? Mn. Copy : Yes—which is Government’s Exhibit 1. Tux Cover: Government’s Exhibit 1. Mr. Copy.—3, 4, and 7. i Tue Court: You mean interrogatories 3, 4, and 7. Mn. Copy: No, sir; stipulation. i 134] Tax Covrr: Stipulation, Exhibit 1. M. Copy: Paragraphs 1, 2, 3, 4, and 7. Tue Cover: Oh, paragraphs. Very well. Paragraphs 1, 2, 3, 4, and 7 of stipulation marked Exhibit 1. Mn. — Right. And answer to interrogatory, para- Tn Cover: You mean answer 11. Paragraph 117 Mn. Copy : The answer, paragraph 11. Tx Court: Answer to interrogatory No. 11. Mn. Copy: Yes, sir. And the answers to supplemental in- terrogatories 1 and 2. I was wondering, your Honor, would it be favorable to the Court if we could take a five-minute break? Tux Court: Do you feel it necessary? We have only been going an hour. Ma. Copy: It might help in the presentation to get our documents back in order. Tre Court : We will take a five-minute break. (RECESS) ‘a Mn. Copy: Your Honor, the Government intends to show at this point Falstaff’s desire to become a national brewer, which desire necessarily intended that it enter New Eng- land. Falstaff had been shipping over 800 miles from New Orleans, its brewery in New Orleans, to parts of Florida ;— [35] TRE Court: New Orleans to parts of Florida? Mr. Copy: Yes, sir. —500 miles from Omaha to Denver and Cheyenne. Te Cover: You mean it had another brewery in Omaha! From Omaha to Denver? Mn. Copy: from Fort Wayne, Indiana, where it had a brewery, to Georgia. New England was not sufficiently further from these points than from, let’s say, its Fort Wayne, Indiana, brew- ery. ; Falstaff also utilized computers to guarantee the efficiency of its cross-shipping. Tue Court: Of its what? Ma. Copy: Shipping. In fact, in 1964 Miller Brewing Company, one of the top ten, competed in most areas of the nation, shipping from a single brewery in Milwaukee. That beer was sold in New England. 12 % re! What we are discussing here are alternative methods of 27 Seine, ar bn. fe into New England other than by the ac- quisition of the leading competitor in this area. M. Gonmo: Excuse me, Mr. Cody. I ean’t let that pass. They were not a competitor in New England at all. Tx Cover: What do you say to that? Mn. Copy: Very well; perhaps I did not make myself „The point that we are trying to make at this point [36] is that Falstaff had alternative methods to enter New England other than the acquisition of the leading brand. Tue Covnr: In other words, you are saying because oth- ers shipped long distances into New England, it was open to Falstaff to do the self-same thing. Mr. Copy : And Falstaff had done the self-same thing. Tux Covnr: Shipped into New England Mn. Cony : No, shipped many miles ; 800, 500,— Tux Court: I appreciate that. Mr. Copy: Et cetera. In support of this we cite interro- gatory No. 1 and the answer thereto, the 1961 annual re- port of Falstaff which is Government’s Exhibit 3(c), page ; the 1962 annual report of Falstaff which is Govern- ment’s Exhibit 3(d), page 7 ;— Tux Court: 3(b) or (d) : Mn. Copy: (d). Te Covnr: (d), isn’t it? Mr. Copy: (d), your Honor. Tux Court: Page what? Mr. Copr: Page 7, your Honor. and Falstaff’s annual report of 1963, 3(e) in evidence, page 5. We also cite from the deposition of Joseph Griesedieck. Te Court: Deposition of J oseph who? Mn. Copy: Griesedieck. Tux Court: How do you spell that? [37] Mn. Copy: G-ri-e-s-e-di-e-ck. I believe it is stipu- lated that Mr. Griesedieck is and was from 1953 to date President of Falstaff Brewing Corporation. Mr. Gonma: That is essentially correct. It is in the rec- ord. I am going to invite the Government’s attention to the fact that Mr. Griesedieck is present in the courtroom avail- able, if the Government chooses, to testify from this stand. Tux Covnr: Very well. , MI. Copy: At page 28 of Mr. Griesedieck’s deposition the _ Second question was: Were you shipping from the Fort Wayne brewery to District of Columbia?” BA Answer: That's right.” Third question, same page: “Was any other plant shipping beer into that area?” Answer; “I don’t think that area, particularly. I think they may have been 0 4e Wie some of the Florida, Georgia, markets, There may be times in the course of the summer when we’re short of production at one plant where we have to cross-ship at a cost to us in freight.” Page 62 of por same deposition Mr. Griesedieck [38], testifi under oath: “Q. Is there any, were there any beers shipped into the State of Florida which come from Fort Wayne? 4 At certain times of the year, I think there is when they are short of capacity in New Orleans. 40. In other words, this is one of your cross shipping times, by cross shipping— - “A. Primarily because of the change in packages to the one can packages and in our capability in New Orleans, we haven’t been able to keep pace with the requirement for canned package and to ship into Florida, which is primar- ily a can state, we had to ship in from other points at cer- tain periods of the year, June, July, August. „. Have you shipped from any other plants other than Fort Wayne on this cross shipping basis? “A. Into Florida or generally? “Q. Into Florida, I’m sorry. “A, I think at certain times even when we were short in Fort Wayne, we have, on occasion, shipped from Galves- ton. I’m not sure. We may have shipped from St. Louis. We have to be constantly cross shipping, depending upon what the market requirements are.“ ne 1391 On 67 of the same deposition, first question: “What determination, who determines the final shipping points, a particular brewery? ? oy „. Who approves the computer’s findings? Is this the ing vice-president? «eae a sinha “A. No, 1 don't think he ge@ into it. We have changed this around so many times, it’s what we call a p E E . : E ; and traffic feed-in, put into the sales require- ments are fed in and the computer determines where it ought to be and I think at one time Mr. Gutting was sched- uling it. We’ve got a change in the last year. I don’t re- member who is involved now.“ But in any event I think this demonstrates that Fal- staff’s ability to ship long distances was very flexible. I refer the Court’s attention to page 97 of the same deposition where Mr. Griesedieck testified, in response to “You say that currently that you are shipping Falstaff beer from the Narragansett plant to Virginia, did I hear you correctly? [40] “A. As far as I know, we are. Yes, I’m sure we are. . Had you been shipping to Virginia prior to the Nar- Excuse me your Honor. In connection with the last depo- sition I read—the last designation—I should have read one more question and answer. And the question was: Were you again * *” Tun Court: Page 971 M. Copy: Les, sir. “Were you again selling selected markets?” Mr. Griesedieck’s answer was: “I think we were selling the whole State of Virginia at that time.” Now as far as shipping as an alternative answer is con- cerned, advertising— Mn. Gonma: I am sorry, Mr. Cody. I cannot hear you T Count: As far as shipping. Yes? .. Mn. Cor: as an alternative method of entry Tun Count: In New England. Yes! 0 Mn. Copy: — into New England, it should also be noted that Falstaff was an effective advertiser, one who could produce demands for its product. It had for years adver- tised the “Game of the Week.” Tun Covrr: “Game of the Week”? Mn. Copy: Yes, sir. Tun Court: Meaning what? Mn. Copy: Baseball game on network television. Tun Cover: You mean it was the sponsor of a program? Mr. Copy: Correct. It had spent $2 million or therea- bouts on an advertising campaign in California, and its ads were in national magazines such as TRUE, LOOK, and These facts, your Honor, will be amply supported by the advertising sections, which are set out in the annual re- ports of 1955 of Falstaff, which is Government’s Exhibit 3(a); 1960, Government’s Exhibit 3(b); 1961, Govern- ment’s Exhibit 3(¢); 1962, Government's Exhibit 3(d); 1963, Government’s Exhibit 3(e); and 1964, Government’s Exhibit 3(f), as well as the March 2nd, 1964 issue of AD. VERTISING AGE entitled “Falstaff to Launch $2,000,000 Drive in [42] California March 2,” which I offer as Gov- ernment’s Exhibit 7. Tue Covnr: It may be marked Government’s Exhibit 7. (Copy of article in ADVERTISING AGE, March 2, 1964, entitled “Falstaff to Launch 62,000,000 Drive in California March 2” marked Government’s Exhibit No. 7) Mn. Copy: I should also note that in 1962 a market study performed by Dancer-Fitzgerald in connection with Fal- staff’s negotiations with Liebmann Tun Court: How do yon spell that? Ma. Copy: L-i-e-b-m-e-n-n. —Brewing Company shows that retailers in New York—and again this is in connection prone that retailers in seh York, New ersey, uth Connecticut, where Falstaff wasn’t doing any business, not selling any beer, thought of Fal- staff as a premium beer. A popular. priced entry by Fal- staff may have been significant as a, marketing device. But, 31 nevertheless, at this point retailers in that area did know ol Falstaff and they thought it was a premium beer. Mn. Gon : Mr. Cody, do I understand you offer that as nexhibit? — MX. Copy: Yes, I shall. Mn. Gornre: You haven't offered it yet? Mn. Copy : No. [43] Mn. Gortwa: I might advise you I shall object on the ground of relevance. Mn. Copy: The Government offers an exhibit entitled “PROJECT ‘X’ Analysis and Survey, February 26, 1962,” as Government’s Exhibit 8. M. Gontwo: Is that the one you have just been talking about? Mn. Copy: Yes, it is. Mn. Copy: That is in evidence. Mn. Gontwo: I beg your pardon? Mn. Copy: The $2 million expenditure in California. Tun Covnr: As it comes out of the ADVERTISING AGE? . MX. Copy: Yes. Ma. Gorrne: I am merely saying it is the same sort of Tun Court: Frankly, the situation in New York, New Jersey, South Connecticut, bears little relation in my opin- ion to the New England territory. I will sustain the objec- tion. It may be marked merely as an exhibit for [44] iden- tification. _ Tue CLank: Government’s 8 for identification. Mn. Copy: Your Honor, may I be heard on that? Tun Covrr: You may be heard but I have ruled. I don’t gay you can’t be heard. MI. Copy: The Government intends to prove by the in- - troduction of this evidence that Falstaff knew or at least had been informed of the fact that it had brand recognition in this area. It is conceivable that the defendant may argue that it would not purchase the beer simply because they. know about the brand: This seems to show that trade peo- ple did in fact know about the brand in this area. There was knowledge of it. kent Bases „ seid Tun Court: Lou are talking about another area. You are not talking about the New England area; you are talk- ing abont New York, New Jersey. teed 6 f Mn. Copy: We are talking about southern Connectieut. Tun Covnr: Southern'Connecticut.. * N : Mu. Copy: And it is also significant that it had. this brand image in an area where it was not even selling beer. Tae Court: That is a part of some survey that was made. The basis of the survey and who made it— axe [45] Mn. Copy: The survey was requested by Narragan- sett—Falstaff, rather. ‘ait Te Court >I reiterate I don’t see the relevancy of it at the moment. If something develops later that has a bearing on its relevancy, I will hear you again, but we will leave it as it is. It may be marked for identification only. , (Copy of document entitled “PROJECT ‘X’, Analysis and Survey, February 26, 1962,” marked Government’s Ex- hibit No. 8 for identification) Mn. Cony: May I make it clear for the record, your Honor, that the testimony concerning the offered document does show that Falstaff requested its preparation and ac cepted.it? For that may I read Tu Court: Read what 2 Copy: Several questions and answers from a deposi- Tun Covnr: You are representing to the Court that the survey was requested by Falstaff. Is that it? . Mr. Copy: Correct. Tue Cover: It doesn’t change my ruling. Mr. Copy: Is that stipulated? ! Mn. Gonmmd: I will the survey was requested by Falstaff. I will not any concessions whatever as to mne validity of the findings of these experts nor as to [46] relevance of what they had to say-evenifvalid.- ©. Tun Covnr: I think your rights are fully preserved, Mr. Cody. Let’s proceed. ee Mn. Copy: All richt. On 5 d what, I have covered, your Honor, the last half an hour or so concerning alternative methods of entry, including shipping, there are various other depositions. which may be read into the record and also several letters as well. With the Court’s permission we will proceed to read them in. Tn Court: Go ahead. That is why we are here. Mn. Gon: May I reserve the right which I have under the rules, particularly Rule 32, to put in—require the Gov- ernment to put in or put in ourselves—any other portion of these depositions at the end of the series of deposition treatment. Tun Court: Certainly I understood you gentlemen had stipulated rather than burden the court with the entire 3 you would select pertinent parts. That ap- plies to sides. Mx. Gortne: That is correct. So we shall read some por- tions of these depositions perhaps after all of the deposi- tions being handled by the Government are in. Mn. Copy: After we close. M. Gomo: Not necessarily. M. Copy: I was thinking, your Honor, it might be 147 dest if that procedure was followed after we closed. Tun Court: Let's present this case in orderly fashion. It ‘might well be some review will be needed. I don’t know just ‘what you have in mind. Once you close, you have closed. You don’t want to reopen the case. Presumably we are going to have a full and complete presentation of what ever it is the parties desire to present during this trial, not ‘after the end of the trial. I don’t quite follow your ap- proach here, frankly. Mn. Copy: All right; very well. Ms. Rererro: Your Honor, in accordance with the point that Falstaff could have shipped into New England, I would like to read— Tun Cover: You would like to read what? Mn. Reperro: I would like to read paragraph 3 or an- = 3 of the interrogatory which has been designated Exhibit 2. oy Covar: Exhibit 2. You are reading interrogatory 2 Mn. Repetto: Answer 3. Tn Court: Oughtn't we have the interrogatory and the 34 gis oo to me that is ‘the orderly way of present 1 8 Mn. Reverro: The ithe interrogatory 8: [48] “List the states in Falstaff sold its beer as of Janu- e eee en Tue Covat: For each year, 1950— Mn. Rererto: To 1965. Tue Covar: January of 1965, 1 ppb Mu. Rurkhrrb: “ * to 1965, it reads. aud designate for each such time which brewery served which states.“ The answer 3 reads as follows : Following are the various States in which Falstaff sold 23 A 5 each og were to @ t or ts w were principal sup- pliers of such States are shown: * rey : Served entire period. Principal supplier—New Orleans.” ' Tue. Covar: What is that, please: Principal supplier? Mn. Rererro: New Orleans. “ALASKA” * Entered market in 1965 Principal supplier—San Jose.“ It doesn’t list “California” but— Mn, Gong: I will agree. [49] Tun Count: I think we can agree on that, can’t we? Mn. Rererro: “ARIZONA an Entered market in 1956. ‘supplier—El Paso. “ARKANSAS Served entire period. ‘Principal supplier—St. Louis. “CALIFORNIA ' Entered market 1952. ' Principal supplier—San Jose. “COLORADO Served entire period. Principal supplier Omaha. *DISTRICT OF COLUMBIA Entered market in 1962. __ Principal supplier—Fort Wayne. “FLORIDA —— Served entire period. Principal supplier—New Orleans. _ “GEORGIA Served since 1953. . Principal supplier New Orleans, subsequently Fort Wayne following acquisition and remodeling. [50] “HAWAII Entered market in 1954. Principal supplier—San Jose. “ILLINOIS Served entire period. Principal supplier—St. Louis. “INDIANA Some sales made in Indiana in 1953, but market opened in 1954. Principal supplier—Fort Wayne. “IOWA Served entire period. Principal supplier—Omaha. “KANSAS Entered market in 1953. Principal supplier—Omaha. “KENTUCKY Served entire period. Principal supplier—St. Louis. “LOUISIANA Served entire period. Principal supplier—New Orleans. “MARYLAND Entered market in 1965. Principal supplier—Fort Wayne. 151] “MICHIGAN ' Entered market in 1954. Principal supplier Fort Wayne. 86 “MISSISSIPPI Servedentireperiod. Principal supplier-—New Orleans. “MISSOURI Served entire period. Principal supplier St. Louis. “NEBRASKA Served entire period. “NEVADA — 5 Entered market in 1954. Principal supplier San Jose. “NEW MEXICO Entered small portion of market in 1954, but more exten- sively in 1956 upon acquisition of El Paso plant. Principal supplier—E] Paso. “NORTH CAROLINA ’ Entered market in 1961. Principal supplier—Fort Wayne. “OHIO Entered market in 1954. Principal supplier—Fort Wayne. “OKLAHOMA Served entire period. Principal supplier—Omaha “SOUTH CAROLINA | Entered market in 1960. Principal supplier—Fort Wayne. “SOUTH DAKOTA Served entire period in very small way. Principal supplier—Omal “TENNESSEE Served entire period. Principal supplier—St. Louis. “TEXAS Served entire period. | Principal supplier Galveston. 37 “VIRGINIA - Entered market in 1963. Principal supplier—Fort Wayne. “WEST VIRGINIA Entered market in 1963. Principal supplier Fort Wayne. “WYOMING Served entire period in very small way. Principal supplier—Omaha.” Your Honor, I would like to read from the deposition of 153 Karl K. Vollmer. Tx Court: How do you spell that last name? Mn. Rererro: V-o-]-l-m-e-r. And, if I could, I would like to read some of the introductory material to show his posi- tion with the company. Tue Cover: I think you should. Go ahead. Mn. Reperro: Page 2; questions 1, 2, 3, and 4. . Mr. Vollmer, would you please tell us by whom you are employed? SA. Now! “Q. Yes, now.” ö Hea: TI Court: When was this taken, by the way? Mn. Rererto: This was taken Mn. Gonrwd: April 28, 1967. orm Rererro: That is correct, your Honor. Taken in St. uis. Tux Covrr: In St. Louis? Mn. Repetto: Yes, sir. I repeat the second question. “Q. Yes, now. “A. I’m now on a purely consulting basis for Falstaff. “Q. And how long have you been on a consulting basis for Falstaff? ‘ A Two, three months—three months since the first of year. 154] . Would you tell us when did you join Falstaff? “A. 1948. “Q. Would you tell us between 1948 and the period when Jou became a consulting person for Falstaff what you have done in the meantime?” nine months and I was asked to become the advertising director of Falstaff. Then after about a year I became Director of Marketing.” ae we EE SAS rst Page 3. I will read questions 1, 2, 3, 4, 5 and 6, 7, 8, and the TR Cover: It is my understanding that the witness went to Falstaff first in 1948 and eventually became Direc- tor of Marketing. Is that the gist of it? Mn. Reperro: Yes, your Honor. Tun Count : Now you are reading where? Mn. Repetto: Page 3, questions 1 through 8. The last an- swer was: be | l Then after about a year I became Director of Market- nes “Q, Is that about 19507 “A, Fifty-one, I would say. é 1551 Q. What happened after that? “A: Well, after that I was the head of the Marketing Department until 1959 and then was asked to head the Planning Department and relinquish my activities as mar- keting director to Mr. Alvin Griesedieck. . And then from 1959 until approximately two months ago you have been in the Planning Department? “A. Correct. Now, were you the head of the Planning Depart- ment? 4A. The Planning Department consisted of me. “Q, And what was your title in that capacity? “A. Director of planning. ...“Q. Director of planning! “A. And Vice President. Did I understand you to mean then that you had no one working directly under you? MAL Nos i, ry Jie “Q. No. To whom did you report? 4A. Mr. Joseph Griesedieck, President.” bg rae page 4. I will go through questions 1 through . I should have asked you, Mr. Vollmer, at the outset if you would just state your name for us and your home address so we have that. 7 * ee 6 “A. Karl, K-a-r-l, K. Vollmer, V like in Victor, o- l- a 4931 Lindell Boulevard. “Me. Fane: Is that St. Louis: “Tae Wrrxrss: St. Louis. “Q. Mr. Vollmer, can you tell us whether you are famil- iar with the term ‘national brewer’? “A, Certainly, Would you tell us who are the national brewers in this country? és 2 BA. Anheuser-Busch, Schlitz, Pabst, Miller's.“ Tue Covrr: He is testifying as of 1967. Is that correct? Mr. Goria: That is correct, your Honor. M. Rererro: 153 . Are you familiar with the term ‘regional brewer’? A. Yes. . 5 ers in this country? AA. Hamm’s, Carling’s, Coors, Falstaff, n Tx Covnr: Just a little slower. A. Hamm’s, Carling’s, Coors, Falstaff, probably Na- - tional Bohemian.” “ 157] I now read from page 47 of Mr. Vollmer's deposi- tion; questions 5, 6, 7, and 8. Mn. Gortne: Page what? 5 Mn. eg age 47. 8 . Was—Is the Fort Wayne operation considered by Falstaff to be a sound part of the Falstaff strueture “A. Well, we've had to reorient our thinking on that, and it's been used to a sreat extent as a shipping plant now for some remote areas that we can’t, that need additional prod- ucts from our other existing plants, or wherever we run Short of product there, why, we fill in from Fort Wayne and, of course, we shipped from there to the southeast, too. . Tes. 77 . now from Fort Wayne? 3 ge" A, Yes, l “Q. I was interested in the leasing situation with an ulti- te buying option which I believe was the means of pur- shasing the Fort Wayne Plant; is that correct? A. Tes.“ : 4⁰ Now, if’ 1 ma, I would ‘ike to read trom Joseph Griese dieck’s [58] deposition, page 19. Tu Count: Give me that again. Ma. Rurxrro: Joseph Griesedieck: T Covrr: How do you sell that? Mr. Rererro: G-r-i-e-sedieck. Tun Cover: He is the President of Falstaff! Mr. Repsrro: He is the President of Falstaff. He has been referred to already, your Honor. . ena aes F What E. en e ef a area, or do you believe in from one point to a national market “A. back in the thirties when we first started, wo, bee of cus. wask fancial erg e felt that we 2 pets el puis’ poten emia of Fe ss iets a questions 3 and 4 of Joseph Griesedieck’s deposition. “Q; Could Falstaff ship from Fort Wayne to Pennsylva- iat. pat T preeume they ü | Where would you say, sir, that the point would be reached where it would be non-feasible or unfeasible for Falstaff to ship from the Fort Wayne plant into the North- eastern part of the United States? te veg answer. eee 3 rat we Department. 8 pretty to generalize on that. We eee lee ieee of the Fort Wayne, I can assure you. We might have shipped out of there if we knew we had potential to acquire capacity at some point but not just to open a market“. 41 | would now like to read from page 37, question 2, of Jo- seph Griesedieck's deposition. a “Q. What would a new brewer [60] entering the New England market need in order to acquire an effective wholesale distribution system A Well, you'd have to be prepared to offer that whole- Saler a marketing plan which would convince him that he “éould sell a sufficient amount of your product to make money. He’d also have to be available to you, which is the primary problem, as we see it, in New England. One of two or several reasons he might not be interested is because they already have other products; primarily I think he’d be in in knowing that you were prepared to spend the kind of money in a marketing operation that will produce results for him and secondly that he can buy the product at a price where he would have the proper mark-up to make a 2 pent These are two factors and then, of course, the repu- “tation of the brand, itself, would be an important factor.” This, your Honor, is one of the reason that we sought to introduce the marketing survey done by Dancer, Fitzgerald to show that Falstaff had brand recognition in a market “where it was not selling because Mr. Griesedieck does spec- fe fy that this is one consideration that he must have to enter a market. Where it is granted that the market [61] “is not New York, New Jersey, or Connecticut, it is suffi- “ Gently close to New England and it is of such a nature, being a market that is important and a market that Fal- Staff does not sell in, that is what we sought to introduce that survey for. I would now like to read from page 80, question 4, and 8 81, questions 1, 2, and 3 of Joseph Griesedieck's depo- n. . In the past, has it been Falstaff’s program that since 1955 to enter a market slowly and expand? . “A. You are referring to a new market? . f A. Basically that's correct. ks „ Generally, what do you do, establish a demand for your products from the existing plant, then when you build what demand to a certain level you seek a brewery within “A. Generally, yes, that’s been our past history, 42 At the time you acquired Fort Wayne or you ac- quired the lease * * *” fy he : Tue Covet: From what page are you reading now, 81? Mo eee I was continuing, your Honor. This is page 1621 “At the time you acquired Fort Wayne or you ac- quired the lease on Fort Wayne, I believe you stated that at that time in that area you had demand for your prod- uet aff 47 5 9 Z . Tes, ina general area, not all the market we subse- quently opened, though.” a | I would now like to read from page 86, question 2 of Jo- seph Griesedieck’s deposition. 8 i . What was the basic reasoning behind the decision to go into New England as a premium beer? n _ “A. Primarily the fact that it appeared to us that the premium priced brands were the ones that were showing the greatest gains and that we should have that margin and our distributors needed that margin to develop the proper degree of distribution. As I pointed out earlier, in the last several years, this whole pattern changed. The pre- mium priced beers were showing the greatest gains. It was obvious to us the public was willing to pay the price. As a new brand coming into the area, we felt we should ap- prone it #2 that basis. If we were unsuccessful, we always the possibility of reducing the price. Once you go in at a popular price, it’s impossible to raise it. That was the basic [63] reason behind the decision.” I would now like to read page 90, question 1 of Joseph Griesedieck’s deposition. Was there any discussion at that time of shipping any of that beer brewed at Fort Wayne into the North- east? “A. No, not on any permanent basis. We might have done it until, as I say, the plant up there was ready to pro- duce certain packages, but not as a permanent move.” I would like to now read from supplemental interrogato- raping en aipemes thereto questions 3 and 4. That is Exhibit Tae Couat: Exhibit 6; interrogatories 3 and 4 and the answers thereto... 4 “As to each Prospective distributor file listed in re- sponse to supplemental interrogatory 3 above, iden- : „ by name and title, the [64] person or persons who caused each such file to be established.” Answers 3 and 4 are grouped together. Tx Courr: Grouped together? Mn. Rererro: Yes, your Honor. TA Court: One answer, you mean? Mn. Repetto: Yes, your Honor. however, been in existence for at least 25 years. Specifi- 5 ed as an exhibit the distributor letters for- 5 fendiane ale Government, pursuant to a eid, by the ae S VVT * Tux Count: Made when? Does it bear any date Mn. Gonmd: January 1965, your Honor. Tue Covet: Is that correet! Mn Gonso; ‘Yes, your Honor. III. Goarne : I am going to object to these unless there is some showing of their relevance. They apparently are letters from people who had some interest in becoming Tue Cover: I haven't seen the documents. Have you seen the documents? I haven’t. Mu. Gonme: I have, yes. The fact that somebody ex- pressed an interest in distributing the product, standing by itself, has no significance to me. Tae Court: T think it might have some relevance on the question of whether or not there was any demand in the [66] New England market or any interest shown in the New England market for the product of the defendant. Is that your theory? Mr. Copy: Yes, it is, your Honor. Tur Court: This ie a file kept in.the regular course of business of Falstaff? Mx. 270 Yes, it is, your ‘Honor, according to their in- ries. I would take this “opportunity also to reiterate that I think the brand ‘recognition survey, which your Honor marked for identification but refused to put in evidence, Tun Count: Let's forget that. ; Mr. Copy : —has the same bearing. Tug Count: Let’s forget that for the moment and direct ourselves to what we have before us here. Ma. Cony: Very well. I thinkgthey are very relevant. They do show an interest in distributing and selling Fal- staff beer in New England,— Tue Covet: Am I to understand that— Mn. Copy : on both parties’ parts. ty Court: —pursuant to this so-called civil investiga- tive demand the defendant Falstaff furnished this: informa- N are offering here? Mn. Copy: Tes, your Honor. It is Gmälar to a wibpaene. [67] Tue Cover: Similar to a ‘subpoena. In other words, the various documents included in this exhibit, or the origi- 50000 MI. Copy: Tes. ean ey Hye IT Covrr: And were furnished to your department pursuant to this so-called civil investigative demand. Is that it? is Mn. Copy: Yes, sir. en 1 Tun Court: I haven't examined the contents, obviously. The top letter would seem to indicate it has a bearing on distribution or sale in the New England area. Suppose you show them to Mr. Goring if he hasn't seen them. I don't know how he can object on the ground of relevance if he hasn’t seen them. Mn. Gortne: I haye seen those letters. Tux Cover: You have seen them? Mx. Gonne: Yes, indeed. They were furnished prior to the beginning of this suit under an extra- judicial process which is known as a civil investigative demand, and it is as Jeompulsory as a subpoena. The fact, however, they were produced has no bearing on their relevance or their posi- tion in this case. All they show is an expressed interest on the part of a heterogeneous bunch of unidentified people in selling Narragansett beer. i 168] Mn. Copy: I will have to object to that. These peo- ple are identified. If Mr. Goring wanted to check out their identification . Tu Courr: I think your objection, Mr. Goring, goes to the weight to be given to these documents rather than their _ admissibility. Your objection to the Court’s ruling is noted. They may be marked Exhibit 9. | Mz. Repetto: I would like to point out there are approx- > imately 30 letters from distributors in the six New Eng- land states, and as part of that exhibit are the replies where replies were made to those distributors, which veri- fies the answer to the interrogatory that these were kept in the regular course of business and that replies were made — for approximately 25 years. The relevance of this fay Court: How far back do these communications ex- 7 Mn. Reperro: The ones that we have here go back to 1960. They cover the period 1960 through 1965. The rele- _ ‘vance here is that in the deposition that I read of Mr. Jo- _Beph Griesedieck one of the factors he pointed out in get- ; ting into a new market, particularly New England, is the availability of distribution and the need to get distributors. On the face of these documents it appears that they [68] were not solicited by Falstaff but were spontaneous inquir- ies by distributors in the New England market. Tus Court: I have already ruled they may be marked as an exhibit. I need no further argument on the area of rele- vancy. The weight to be given to them is something else. | (Copies of letters from various distributors in New Eng- land to. Falstaff Brewing Corporation, and replies by Falstaff Brewing Corporation, 1960-1965, marked Govern- ment’s Exhibit No. 99 Mn. Copy: At the expense of belie r your Honor; I would like to say one more time that if we take the distributor letters in conjunction with the brand recog- nition survey; there is a relationship because— Tue Court: Mr. Cody, how many times do I have to tell you that the Court has already ruled on the admissibility of that proffered exhibit? At the proper time if you want to argue it again, I will listen to you. We are not getting anywhere, Let’s proceed. When the Court rules, the Court assumes full responsibility for its ruling. Mr. Copy: Very well, your Honor. Mr. Reretro: Continuing further, your Honor, with the alternative methods that New England possibly could have been entered in relation to building a brewery in the New England market, I would first like to read from [70] Harvey Beffa, Sr.’s — Tae Court: Mn. Repetto: Beffa—B-e-f-f-2. Tu Court: Taken when Ma. Rererro: Taken April 27, 1967 in St. Louis. I will first read some introductory material to show Mr. Beffa’s position with Falstaff. First I would like to read from page 2, questions 1, 3, and 4; page 3, 1 through 7; and page 4, question 1. Sir, would you state your full name, please! “A. Harvey Beffa, Sr. “Q. Would you state your current employer? “A. Falstaff Brewing Corporation. . And your position with Falstaff today? “A, Executive vice president, chairman of the board. eee e en those positions 47 ae * Executive vice president, 53; chairman of the board “Q. Could you please state as briefly as possible the oF ions and responsibilities commensurate with your po- _ sition as executive vice president! “A. Yes, sir. The operations report to me, purchasing, personnel, and research and development. . As to the research and development department, [71] is this basically in connection with the brewing? “A. It’s in connection with the product. _ “Q. This research and development department would not deal in any way with marketing or market expansion? “A. No, sir. . Now, in making the ima ‘For the long-range ‘Manning, we are aiming for national distribution. Natn- rally this involves coming east. This can only be accom- plished as our produetion capacity is expanded.’ In October of 1964, did you have at that time any ee 3 in 5 mind as to expansion into the East? } ot particularly, I think our posi- that it would depend on what the opportunities ning markets became.” was ducted prior to that, frankly. 40. In conjunction with that study of the market, was there any feasibility study made as to the possible building of a brewery in that area, the New England area? 4A. Not specifically New England, no. „J. Was there a study conducted as to the feasibility of building a brewery in the Northeast? , “A. No.” Now I go on to page 76 of the same deposition. Tun Covnr: 761 Mn. Saar: Yes. Question No. 1 on page 76: Mr. Griesedieck, Id like to show you again Exhibit 3A, page 16, and the ag sie again in the lower righthand corner of the page. a look at that again, please. In relation [139] directly to the statement that naturally this involves coming East, what did the word ‘East’ mean at that time in your statement? Gy “Mr, Farr: Will you indicate what that time is? “Q, The time of the speech, October, 1964. “A. Well, at that time, we had been talking to Narragan- sett, s0 I presume I was referring to that. 40. Does that then coincide with the following state- ment: ‘For the present, it is likely that our pattern of con- tiguous growth, that of ourself in an area, then spreading out to surrounding areas will continue.’ very limited as to who knew about them. We weren’t about to'make any public statements at that stage as to the fact we were considering this“ I now go to page 19 of the same deposition; questions 2 [140] Tan Cover: Page 191 Mn. Saaat: Les. In the last few years, let's say 1962 to date, have the national brewers’ sales been progressing at a larger rate than the large regional brewers? A. Generally speaking, yes. “Q. Has this been a matter of concern to Falstaff? “A. Definitely.” Page 20; questions 1, 2, 3, and 4. “Q. Have the national brewers been making inroads into the existing Falstaff markets? ; “A. Definitely. “Q. Have they been hurting the sales of Falstaff in their current regional markets? “A. Yes. A, We haye always discussed within our Board of Directors our ambition that don’t think it’s been publicly stated—that we feel in order to be competitive with the so-called national brands that we have to become national because this prestige factor is of vital importance. The ability to advertise on a national basis is important and so that while our timetable has certainly never been pinned down on the specific basis, we have always taken [142] the ition that when the right opportunities are made avail- able for opening a particular market, we would attempt to look into it, but this involves many factors in different markets. That’s about all I can say on that subject.” I now turn to the same depositon, page 23, question 1. This is the question: In the period 1960 to 1965 was there any discussion by the Board of Directors about the possible acquisition of a brewery in the Northeast as defined previously? “A. Tue period 1960 to 1965, yes.” I now turn to page 32, question 3. “Are there certain factors that are inherent in national distribution that give them an advantage over a large regional or a regional brewer? Answer on page 33: “Several, in my opinion.” Page 33, question 1: “Would you list them for me, please? “A, One, I think I stated earlier, the opportunity to use a national vehicle for advertising such as a television spec- tacular, or a vehicle such as the Tonight Show.“ We are limited to [143] regional marketing and advertising op- 90 Another is the prestige that is gained from all over the country for the great mass el back and forth today, they can get it 0 ey want, and they begin to think of this as a product that must be better, and then the period of years 845 i 2 8 of 3 i 8 — : 87 markets, where they were selling at or under us and that ig bound to create a desire on the part of the consumer to up- grade himself to what he calls a bargain situation. . Are there any others that come to your mind? “A. There may be others. These are the principal ones that we see. . Does the weather have any effect on sales? “A. Well, again, being national, of course, there is some protection there. The weather is definitely a factor. To the degree that a market is limited to a brand, the weather can be more of a factor than if he’s spread all over the coun- try. If [144] it happened to be cold in one area and warm in another, it balances itself out. If you’re limited in scope and if you happen to have an abnormally cool spring or a heavy snow, like Chicago this winter, those brands are much more penalized than that brand that may also be sell- ing in California at the same.time where they are having a heat wave or something, so it's a factor, although probably not as important as some of the others I mentioned.” On page 34, question 1: “Does Falstaff have labor contracts with each of its plants or does it have a labor cantract universally throughout? “A. Each plant separately. 8 “Q. Is this true of the brewing industry, do you know? “A. Generally speaking. . Do labor troubles, strikes, things of this nature have an effect on sales? A. Definitely. . Would there be a difference between the national versus the regional? AA. There is an effect on all brewery sales when there’s strike in an area. Those brands who are shipping in "Where they are not on strike [145] definitely have an ad- regional.” 88 de, “cea er HER NOON a strike, are they Co “Q. By reason of the diversification of the + brewer, is he more able to stand a price competitive situa- tion in a particular market? = gaa pe “A. Quite frankly, they are the ones that are causing the priee oompetitive fights, yes; I’d say so.” Page 36, question 1: “What would be the basic ingredients for a brewer to go national in his sales? “A, Money, first of all; a good product; and a good wholesale organization. . Would it be necessary for a national brewer— “A. And talent. . Excuse me: 3 “A. And talent of maigement, if you want to call it that. 2 “Q. Talent in the management level or in the local re- gional level where they would be selling? 4. All the way through the organization, primarily the top management level. „Would a brewer ***” Tue Court: Is this page 36 you are still on? Mr. Sacat: Yes, I am still at page 36. I am now at ques- tion 5. Would a brewer need regional plants to go national? “A. In today’s market, I would say 80, yes.” Tun Court: “Regional plants.” Those are breweries, aren't they!!! | % Ma. Sacat: Brewing plants or production facilities, I „. Has it ever been discussed in the last five ‘years since 1960, has it been discussed before the Board of Direc- tors who will be the most successful. in the brewing indus- try! ms a? 89 “A. You mean pe HE or the manner rin which ac N e manner in which they operate? A. Certainly, there have been many discussions in [147] our Board as to the belief that those brands who are na- tional who have a complete range of product in the sense of different priced brands and those brands with a strong wholesale organization and a good marketing operation are the ones that will be the most successful. This has been the —certainly a prediction that I made even before 1960 and this is what is happening in the industry today. alte The foregoing deposition testimony and documents which the Government has offered into evidence have been intro- duced to show that there are advantages in being a na- tional brewer and that Falstaff was very much aware of these advantages and desired to have these advantages. I would now like to read from page 39 of Joseph Griese- dieck’s deposition. Question No. 1: “Has Falstaff ever considered the possibility of intro- ducing a second beer, a second brand of beer? “A. We have given it a lot of thought many times, pri- marily in the premium price area and have always come to the conclusion that to do so would be prehibitively expen- sive and would take many, many years and it was believed that we shouldn’t take those resources away from Falstaff. It’s [148] our belief that there is a limit to the number of premium priced beers that could be developed from scratch. . Would this need or this desire for a second beer be in conjunction with the hopes that one day you will go national? “A. I don’t recall whether it was discussed in context with that or not. As I stated here earlier, we always said we wished to go national but I think that the fact that we felt the second brand of beer was important probably be- came more of an issue from about 1960 on when we saw the definite trend toward the national brand, the so-called pre- mium priced brand, and the need to give these wholesalers two brands.” Page 55, question No. 1: “It is true, is it not, that Falstaff has never built a brewery? ‘two that „A. Mr. Vollmer and I worked together on that, on those moves, yes. He would probably have some knowledge of them. I am sure he was involved at the time.” Tur Court: 1 think it is 4:30. We will stop here, gentle- men, until 10:00 o’clock tomorrow morning. Ma. Copy: Your Honor, if it please the Court, I have one matter to take up. Tux Court: We will take it up tomorrow morning. The Court has adjourned. Adjourned at 4:30 p.m. until Wednesday, October 7, 1970, at 10:00 a.m.) UNITED STATES OF AMERICA IN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF RHODE ISLAND v. C. A. No. 3523 FALSTAFF BREWING CORPORATION Before his Honor, Chief Judge Day Wednesday, October 7, 1970 APPEARANCES: For the Government: Philip F. Cody, Esq. Bruce Repetto, Esq. Kenneth A. Sagat, Esq. Department of Justice ; Antitrust Division For the Defendant: Hinckley, Allen, Salisbury & Parsons; Matthew W. Goring, Esq. of counsel. Jerome M. McLaughlin, Esq. St. Louis, Missouri 91 No. 18 Government's Exhibits’ Certificate, signed May 24, 1967, by Harry J. Pettey, Secretary of Falstaff Brewing Corporation, previously marked as attached to Government’s Exhibit No.6 Falstaff Brewing Corporation press release dated October 16, 1964 . : Falstaff Brewing Corporation Quarterly Report for period ending June 30, 1961 | Copy of letter dated June 22, 1962, to Mr. Howard Suslak from Joseph Griesedieck with two copies of suggested Statement of Understanding attached Copy of Memorandum entitled “Chronology of Events, Ete., in L Negotiations”, dated April 30, DEBE Copy of letter dated ‘April 1, 1963, to Mr. Joseph Griesedieck from Edward P. Bemberg with at- .. tached. Statement of Understanding Reached in Negotiations Between Liebmann and Falstaff l of list and data schedule entitled: RE: L. B., Cc. , 42 Copy of Quarterly Report to Shareholders for Period Ending June 30, 1963, Falstaff Brewing Corporation i Copy of document entitled “Excerpts from Execu- tive Committee Meeting Minutes” Copy of memorandum dated December 9, 1963, marked “Personal” Copy of Falstaff Brewing Corporation office mem- orandum, with attached proposed letter to Honor- able William H. Orrick, Assistant Attorney Gen- eral, Washington, D.C. Copy of memorandum dated December 12, 1963, en- titled “Meeting Re East Co.” Substitution for previously marked Government’s Exhibit No. 1 Page 72 76 96 106 129 [153] SECOND DAY Wednesday, October 7, 1970 10:00 am. Ma. Rererro: Good Morning, your Honor. I wonld like to first correct a mistake that was make yes- terday. A document that was read into the record had a certificate that makes references to several meetings—min- utes of the meetings of the Board of Directors of the Fal- staff Corporation, signed 24 May 1967 by the tary of he Corporation, Harry J. Pettey, and it was attached to it 6 incorrectly. Tue Cover: Exhibit 61 _ Mr. Reperro: I would now like to remove that and offer this document into evidence as Exhibit 18. Mn. Gortne: No objection, your Honor. Tux Covnr: Now the title of the document will be what, “Certificate”? Exhibit 18. 3 (Certificate, signed May 24, 1967, by Harry J. Pettey, Secretary of Falstaff Brewing Corpora- tion, previously marked as attached to Govern- 81 ee 6, marked Government’s Exhibit o. 18. Tun Covrr: As to certain minutes of meetings. Is that it? _ Mr. Reperro: Yes, your Honor. There are three [154] meetings listed. I would like the record to show all refer- ence to this document as Exhibit 6 be read as Exhibit 18. Tux Cuerx : The Certificate is dated May 24, 1967. Mn. Copy: For the record, your Honor, perhaps we might ask that all references to that particular part of Ex- hibit 6 be read as Exhibit 18; Exhibit 6 still being in evi- dence by itself. Tux Covnr: Certainly. The record will so indicate. Mn. Copy: Before we continue with our substantative 3 your Honor, there is one problem I would like to re- a b Mn. Gorrne: I am sorry, Mr. Cody. I cannot hear you. Mn. Copy: I am sorry; I will speak louder. Yesterday I was informed by Mr. Goring that he intends 93 94 But the fact is I suggest il: the: witness appears. I Tun Court: What do you say to that, Mr. Cody? At the present. time there is a professed intention of Mr. Goring to ball this witness at some tine. Mn. Copy: I would be interested at this time to know ex- actly why, this witness was. not designated before and why he is designated now. That may help us in preparation for his cross-examination and considerably shorten the time needed for it and thereby aid the Court. "Me. Gonne: I am quite prepared to inform the Govern- ment and the Court on this point. The pretrial order does in fact, as Mr. Cody has said, call for advance information respecting witnesses proposed to be called and, in general at least, the subject matter of the testimony which is to be Now, I did not know this witness was available until sometime in the last three days. I did not, when I learned that he might be available, make then a decision that I [156} should like to call him. The subject matter of inquiry which will be made of this witness is within the bounds of the subject matter to be adduced by other witnesses. Tae Court: In other words, it is cumulative testimony. Ma. Gonmo: It is accumulative testimony from a differ- ent—well, shall I say from a different sort of witness, whose experience will add a little to the stature of what he says. The ground to be covered is not new. Mn. Copy: May I have one minute, your Honor? Tue Covrr: Certainly. / {A panse.] Copy: The only thing I would say, your Honor, is does put the Government at somewhat of a disad- UBT ; : In what way? Mn r: In that if this witness is to testify within a few days, that we may not have adequate time to totally esearch his background. I would ask the Court in a gen- eral way now, if we do need additional time to prepare for eross- examination of this witness, whether that time will be available. a | Tax Court: In effect, you would be suggesting to me this matter, which we had hoped to try within a given time, ma be further continued. Is that what you are saying? 1157 Mr. Copy: No, your Honor. All I am saying is that it may be necessary for the Government to ask for a day or two to conduct additional research. I don’t know, for in- _-stance, whether this man has written articles. We will have to check into his background somewhat, whether he has tes- tified in previous proceedings. Tun Cover: I think what we will do is eross that bridge ‘when we come to it. . MI. Copy: All right. Very good, your Honor. Mn. Ser: Your Honor, yesterday the Government in presenting its case was introducing evidence to establish that Falstaff was a likely entrant into the New England market. In particular, before adjournment, the Government Vas presenting evidence to establish that Falstaff needed and desired entry into New England. I will now continue to “Offer evidence to establish that point. Tux Court: Very well. 4 Mn. Sagat: I will now read excerpts from depositions which, in establishing that point, show in particular the ~ corporate interest of Falstaff in expansion. I will first read from the deposition of Joseph Griesedieck which, as indi- cated yesterday, was taken on April 26, 1967. I will first read from Page 91, questions 1 and 2. .I show you this Plaintiff No. 6, Mr. Griesedieck, . . .” 1158 ‘Taz Court: Show what, please? Mn. Saar: Plaintiff No. 6. It refers to a deposition ex- Mbit which is— Tux Court: Attached to the deposition? Teme ok f 2 N + 2 7 ORY 2 er : . 55 8 2 4 . bn N 7 8 iy ‘ é 44 * — . 2 be 3 a SE ER 2 1 5 8 8 8 lite 17175 ut 12 Hig EE ay Hn 273 iH 11 5 it 0 i Tpor on fo Pa 94, quest 1, 2,8, 4,5, ande tbe aint * ’ 4 no cost study, as such, done? was. I ask now to look at Line 15 starting approxi- . 4 "tho second column which shows the figure of $20,000,000. Ee “A. I guess I was really underestimating when I told ten. It was twenty. : 97% Or $21.40 ag Now, Plant 7, I believe, is Fort * ce 5 . same deposition, Page 109; questions 3 and 4. No, excuse me. That is Page 100; ques- tions 3 and 4. . Was it part of the Falstaff marketing situation to try to sell Falstaff at military installations : A. We do that, yes. . Is this an area in which vou would get people from all over the country to gain acceptance of your name? A. Certainly that’s a factor.” _ I now refer to Page 179 of the same deposition; [161] questions 2 and 3. “Q. The negotiations with Narragansett terminated in February of 62, is that correct? 2 “A. That’s right. 3 “Q. Mr. Griesedieck, I show you Exhibit No. 20. Would you examine that, please?” S 4 we 8 8 Tux Covnr: This is an exhibit again with that deposi- tion? MIX. Sagar: With that deposition ; yes, your Honor. _. “—Sir, this is a press release from your corporation al- legedly referring to statements made by you. Would this be & type of press release that you would see and approve? A. I would think so, yes.” On Page 179, question 3—question 4. Tae Cover: Question 3 or 4? Mn. Saar: 3, I just read. Excuse me, your Honor. 4. ; 0. Directing your attention to the second page, first paragraph relating to the expansion of Falstaff in the $i long-range expansion program, particularly the quotation: Tam Cover: Is this „second page” referring to Exhibit 0. eee e eee ö N to us in St. Louis??? K. Well, that was part of it. The basic, the major expan- sion was Fort Wayne, contemplation of Fort Wayne, which was some twenty million dollars. We then estimated in the ten-year period on the basis of an optimistic projection of 5 percent a year, we would have to have capacity in some of our other plants, and we just took a rough estimate of ten million dollars to round out this figure. This was not based on any, let’s say, detailed, long range study. This was just an estimate based on what we thought our capac- ity needs for our existing markets would be in the next ten years, assuming, as I stated earlier, annual sales increase between 5 and 6 percent. That projection that you have theré is the one that was used to rough up these figures.” I will now go on to Page 181; questions 1, 2 and 3, Excuse me, your Honor, that exhibit in the deposition, [163] Plaintiff’s Exhibit 20, I would now like to introduce into evidence as the Government’s Exhibit No. 19. This is a press release, Falstaff Brewing Corporation, dated Octo- ber 16, 1964. Tue Court: Exhibit 19. [Copy of Falstaff Brewing Corporation press re- lease, October 16, 1964, marked Government’s Ex- hibit No. 19.] Mr. Sacar: On Page 181 of the deposition of Joseph Griesedieck, Question 1—this question, as you will see, your Honor, refers to the Plaintiff’s Deposition Exhibit 6, which I mentioned a few moments ago. „. Now, that document . .” Tre Court: Was that Plaintiff’s or Interrogatory 67 M. Saat: That was Plaintiff's Exhibit 6 for the deposi- tion. Te Court: Oh, for the deposition. Ma. Saar: [Continuing] ee 99 85 hea 0. Now, that document, Exhibit 6, shows a plan of twenty million dollars for the Fort Wayne plant, is that dorrect : A. Correct. oe MQ; And an increase in barrels in the Fort Wayne plant of approximately a million barrels? . This doesn’t break it down unfortunately by plant, so I would have to—they show a month—[164] this is a monthly figure. This would be approximately a hundred thousand barrels—I would assume that would be a million roughly for a year. “Q. At the time this plan was drawn up, what was the plan for that additional capacity at Fort Wayne? A. Well, it was in two phases. Phase 1 represented, I haven't got the details, as I recall it Phase 1 was more in the area of rehabilitation of the plant with some expansion. Phase 2 represented an additional expansion program. This was to be done either simultaneously or spread out. ‘We had no finalized decision on that. As I stated I think earlier none of this was done except the installation of a ‘warehouse, which was part of this program.“ Tnow refer to the same deposition, Page 106. Tux Court: You are going back now to Page 106. Mn. Sadar: Question No. 2 which runs onto Page 1077: “Q. Mr. Griesedieck, I am going to show you Plaintiff’s Exhibit 7 and it is, as you heard, the proxy statement and Td like you to take a look at it THe Court: Proxy statement! 1165 Mn. Sacar: Yes, your Honor. That in this progeed- ing is Plaintiff’s Exhibit No. 5. “—and it is, as you heard, the proxy statement and I’d ike you to take a look at it and see whether or not you saw that before it was printed? — Well, Tm sure I saw it in the Printer’s galley proof.” 5 Now, for questions 1 and 2 on Page 107. “Q. This is something that would be presented to the Board of Directors to authorize to be issued? “A. I'd like to ask my counsel that. I don’t know. “Mr. McClellan: It was presented. I don’t know whether they read it or not. It was presented. . I'd like to direct your attention, sir, to Page 2, the 100 first paragraph of that section entitled, ‘Considerations relating to the proposed acquisition,’ and ask you if you will read that to yourself, please? Id like to direct your at- tention to the sentence in the middle of that paragraph, and I will quote: ‘On the other hand, Falstaff faces sharply increased competition in its major markets, [166] particu- larly in the South and Southwest where breweries are now being constructed by Anheuser-Busch and Schlitz, the na- tion’s largest brewers.’ This relates back to the statement you made earlier today that you were facing more and more increased competition in your basic marketing area in 19641 “A, Well, actually I think this was developed in early 65, but the trend was certainly there, that's right.” On Page 108 now, questions 1, 2 and 3. „. What was the sharply increased competition in your major markets that’s referred to here? “A. I think they are referring to the potential competi- tion developing out of the building of plants by Busch and Schlitz in the Texas market, particularly where we have al- ways been a large factor. It was quite obvious to us with these plants in these areas where the local influence—par- ticularly in Anheuser-Busch’s case, their promotions, their gardens and all the rest of the things they have done—was bound to create additional competition in the Texas market as far as the South is concerned. This would enable these brands to obviously become a [167] little more competitive price-wise because of less freight and these have been our major marketing areas and we were being cut into by these brands even prior to their building these plans. It looked to us that with the addition of these plants certainly they were going to be more competitive. “Q. Were you losing sales in your marketing area to the nationals in late 64 “A. Late 64, the trend was beginning to be felt. Cer- tainly it was being accelerated in 65. „. Was there a similar loss of sales in your marketing area during 637“ : The answer on Page 109: “J can’t recall. There probably was some although we were probably gaining in others, so I can’t recall exactly. I think the great acceleration of the premium or national brands has been more, say, in the last three years. In addi- 101 tion, of course, Pabst has entered into the picture at that point, too, as a competitor, not so much in Texas but in the South.” Txe Court: This deposition was taken when, in ’67? Mr. Sacat: This was taken in 67, April of 67. 1168] I now read on Page 110 of the same deposition questions 1, 2, 3 and 5. “Q. Again, quoting in the paragraph on Page 2 in Ex- hibit 7 :—” —which I will just say is the Government’s Exhibit 5 in this case— At needs further diversification of markets for its products, particularly in the Northeastern States and in the popular centers of New York and Pennsylvania.’ Would you explain the need for the further diversification of markets for its products? “A. Well, it gets back to the philosophy that as an at- tempt to become national, these were the areas where we had to move, provided the proper conditions were to exist either through facilities, distribution, market conditions, et cetera. “Q. Is the Northeast a high beer consumer area? “A. Probably the highest in the United States as an area. “Q. Is this a desirous area to be selling beer in? “A. Certainly it is. 5 “Q. Prior to this time, prior to the acquisition of Narra- _‘gansett, was there no discussion before the [169] Execu- tive Committee of Falstaff as to the possibility of entering into this market, the Northeast market? “A. Prior to the acquisition of Narragansett, prior to the consideration of the acquisition of Narragansett? “Q. Prior to the acquisition—strike that. Prior to the consideration to acquire Narragansett, was there a discus- sion before the Executive Committee as to the desirability of being in that market? “A. Sure, we have discussed at times the desirability of being in that area as part of our total national program. No specific proposal was proposed that I know of other than the one we are talking about here if you’re speaking with reference to New England. If you're speaking with reference to other areas, there were other areas that I se 102 think you're aware of, but nothing that we developed. I mean, these were all things brought to us. We did not at any time that I recall ever specifically say, the Board or the Executive Committee, we want to be in New England and we're going to go in New England next month or something like that, if that’s [170] what you're referring to. We probably said—I know we did—that it was our ulti- mate ambition to be national, and to that degree, someday we would have to sell the Northeast, but we would not be able to do it without the proper combination of opportuni- ties.” On Page 112, question 4. „. Was there any particular need to be in the North- eastern States? “A. Only that it represented the large beer consumption area and that ultimately this was a market that we felt we had to be represented in if we were to become a national factor. Without being in that area of the country, nobody could be a national factor because this is where the bulk of the population exists.” I now refer to the deposition of Alvin Griesedieck, taken May 2nd, 1967. TRR Court: May what? Mr. Sacat: May 2nd, 1967. I refer first to Page 7, questions 3 and 4. Question 3: “Was it a part of your function as director of marketing, this would be subsequent to 1960, [171] 1961, was it a function of your job that you consider new ways to sell Falstaff beer in markets they were not then selling it in? “A. Yes, I would say it was. „. And were you concerned merely with those areas that touched on the present Falstaff market, or were you con- cerned with any area that Falstaff was not selling in? „A. Generally speaking, I would say that I felt it was my responsibility to, you know, to be abreast of, you know, potentials of, yon know, for beer sales anywhere that we weren’t selling, but primarily in areas contiguous to our present marketing area.” In the same deposition I will turn now to Page 26, Ques- tions 1 and 5. Tun Court: 1 and 5. You are going back to 1. Is that it! 103 Mu. Sagar: This will be Page 26, questions 1 and 5. Tae Court: Page 26. Mn. Saar: [Reading] f “Q. I show you Plaintiff's Exhibit 52 and ask if you would read the first page to yourself, actually just the lower paragraph on the lefthand column unless to wish to read the entire [172] article.” Tun Court: Is this Plaintiff's Exhibit 52 an exhibit marked in connection with the taking of that deposition : Mr. Saar: Ves. TR Court: Is it in evidence in this case? Mn. Saar: No, it is not, your Honor. Question 5 on Page 26— THE Court: Page 26. Mr. Sacat: [Reading] “Directing your attention to the right-hand column on that first sheet, the first full paragraph: ‘Yet in this area in 1957 Falstaff will sell well in excess of four million bar- ” - Tun Court: What area were you referring to there: “in this area”? Mr. Saar: I believe that is referring to Falstaff’s basic marketing area in 1957. N TRR Court: Its entire marketing area? Mr. Sagat: In 1957. THe Court: 1957? Mr. Saar: Yes. Tue Court: Ten years before? Mr. Sagat: Yes. I repeat the question, question 5 on Page 26: [173] “Di- recting your attention to the rigiit-hand column on that first sheet, the first full paragraph: ‘Yet in this area in 1957 Falstaff will sell well in excess of four million barrels, which will be approximately 18 percent of the beer sold in the area.’ Do you recall at that time that this was approxi- mately the market penetration of Falstaff in its current marketing area? “A. I believe it was, yes.” : Now, on Page 27, the same deposition, questions 1 and 2. . Did you have a similar figure of market penetration kor the basic marketing area in 19641 . “A. You mean for this same area? 104 0. The Falstaff marketing area as it was in 1964, did yon have a market penetration figure? / “A. I wouldn't have it right off the top of my head, no. I know it would be less, substantially less. Turning to Page 28, question 2322 A would ask you, sir, what do you mean by substantially less as to the market penetration in 19647 gress A. IL would speculate that about that time that [174] penetration probably dropped down to around 13 percent. That, again, is somewhat of a guess.” Mapa Now to Page 30; questions 3, 4, 5 and 6. Excuse me. I will read questions 2, 3, 4, 5 and 6. „. Were there any other metropolitan areas that you can recall where you were having trouble from the nation- als? “A, Where we were or were at that time? „. Yea, 1963, 1964. “A. Metropolitan areas, Kansas City—the reason I’m hesitating is because back at that time we were probably having just as much trouble from strong regional brands in some areas as we were from nationals. “ We were interested in Liebman because it would “allow us access to the biggest market in the United States. What market is that! [241] “A. New York City. 4 Was that the primary reason? reason. om Prior to this negotiations with Liebman had it been discussed in the company that it would be desirable to be in New York City? a “A. Yes. Had it been discussed—strike that. Had possibilities of * of getting into New York City been discussed ! es. I would like to offer as Exhibit 24 a hit and data sched tle — “Tae Court: List and ~— Mr. Sir: —schedule of data entitled “RE: L. B., Inc.” True Court: There being no objection, it may be marked Government’s Exhibit 24. Mr. Gontxo: No objection. [Copy of list and data schedule entitled RE: LB., Inc.” marked Government’s Exhibit No. 24] Mn. Sagat: I would like to point out that on the first this document, under ¢ Court: This is Exhibit 241 7 Mn. Star: Exhibit 24, yes. under “Acsumptions” there is a series of numbers which appear to state the price that Falstaff would pay for Liebmann and the zum of those numbers is 626,080,920. 141 JE. would like to offer a Quarterly Report to Shareholders for the Period Ending June 30, 1963. TI Court: The shareholders of Falstaff, you mean? MI. Sacar: Yes, Tun Court: What is the date again? M. Saar: For the period ending June 30, 1963. The date of the report is July 10, 1963. T Court: It may be marked Government’s Exhibit 25. ~~" (Copy of Quarterly Report to Shareholders for Period Ending June 30, 1963, Falstaff Brewing oo ase marked Government’s Exhibit No. 25. * Mn. Saar: On the second page of Exhibit 25 I would like to read three paragraphs. “On June 11 we issued a statement regarding discussions between Falstaff Brewing Corporation and Liebmann Breweries, Inc., of Brooklyn, N. F., about a merger of the two firms. “These discussions are presently continuing, and if they lead to an agreement to merge, the plan would be first sub- ject to the approval of the boards of directors of both firms. Following such approval, the next step would be to provide [243] you, the Falstaff shareholder, with the merger proposal, and a proxy which would be voted at a special meeting later this year. Should the merger be completed, it would be our plan to continue the aggressive merchandising of Liebmann’s Rheingold beer in its current marketing area in the north- eastern United States. Such a merger as the one under dis- cussion would bring Falstaff closer to its goal of eventual national distribution.“ I would like to offer as Government’s Exhibit 26 a docu- ment entitled “Excerpts from Executive Committee Meet- ing Minutes.” [Copy of document entitled “Excerpts from Executive Committee Meeting Minutes” marked 5 Government’s Exhibit No. 26.] M. Sacat: In Exhibit 26 there is reference to the Execu- “five Committee’s consideration of the Liebmann negotia- 142 I would like to offer as Exhibit 27 a memorandum dated Tue Court: It may be marked Government’s Exhibit 27. [Copy of memorandum dated December 9, 1963, marked Government's (Personal) Exhibit No. 27.] Ma. Sacar: I will now read from the deposition of [244] Joseph Griesedieck at Page 127, question 1. “Q, ‘Im 1963; did the Falstaff Corporation have discus- sions with Ballantine ‘about the possibility of an acquisition or a merger? 1 A “A. We had discussions with Ballantine around 63 or 64. I don’t remember exactly when.” I will now read from Page 128 of that deposition; ques- tions 1, 2, and 3. What I will read in the question refers to Exhibit 27 that I have just offered into evidence. Tun Covrat; The page again, please? Mr. Sadar: Page Tux Court: Questions 1, 2, and 3, did you say? Mr. Sacat: Les. Tue Cour: It refers to Exhibit 271 Mr. Sagat: Yes. „. Directing your attention, sir, to page 1, which is enti- tled, ‘Proposed East-West Company Combination, I. Sug- gested Purchase Price,’ and listed there is 43.5 million dol- lars suggested as a purchase price for East company. Do you recall that as being a price that was suggested to the Executive Committee? 4A. Well, Mr. Eberstadt, who composed this memoran- dum is a broker and again representing, Id suppose you say he’s playing an independent [245] role, and he sub- mitted this to us as a suggestion, which I’m sure with this file, as you say, was submitted to the Executive Committee for analysis, is that what you’re asking me? „. Yes. Was that document then discussed before the Executive Committee? “A.. Certainly. ey | „. Was any action taken on that recommendation? „A. I can’t recall dates again. This is again an instance where the Ballantine people came to us proposing that we take a look at the combination of the two companies, We did not enter into it with really any serious note because it 143 didn't seem possible to us it could ever be put together but “we did agree to look at it. We agreed to have an independ- ent individual such as Mr. Eberstadt, because here again there was a reluctance on the part of Ballantine to have us look at the figures. We agreed to have him look at both sets ‘of figures and put together what he considered to be a fair deal. To the best of my recollection, this was reviewed with ‘the Executive Committee and a decision was made [246] to make one further meeting and point out that without an analvsis of their figures, we were not in any position to make any kind of an offer. We didn’t know if this was fair enough or not, not having any access to their detailed figures. We were not really too vitally interested because we didn’t think there was any real way to do this.” Page 129; questions 1, 2 and 3. “Q. Directing your attention to the last page in that sheet of paper therein, Exhibit 10, and it’s after page 5—” Tun Court: Exhibit 10, once again, is Exhibit 27 before the Court? . Mr. Saaar. Yes. Tue Court: All right. “Mr. MoCLxILAN: You mean on the back? “Q. Yes. is that handwriting familiar to you? “A. That’s mine. “Q. That is your handwriting? “A. Right.” Page 133, question 4. „. In other words, the $35,500,000 offer would have had to have been approved by the Executive Committee before Fou would offer it? _ [247] “A. Well, this meeting was, on 12/12 was—in effect represented an Executive Committee Meeting in the “sense that we were meeting.with them and in the course of ‘the discussion retired and came up with this figure. I don’t think this had been pre-arranged, frankly.” I Would like to offer as Exhibit 28 an office memorandum dated February 18, 1964, to which is attached a proposed letter to the Honorable William H. Orrick, Assistant Attor- “smey General, Department of Justice, Anti-Trust Division, “Washington 25, D.C. 144 a Mn. Scar: The Honorable William H. Orrick. 5 Mn. Ser; O Nr- kek, Assistant Attorney General, 1 Justice, Anti- Trust Division, Washington dar dee ,ese (Copy, ot Felstaßk Brewing Corporation office 5 meets dim, dated February 18, 1964, with re e pred to 8 Orrick, Assistant Attorney Gen ashington 2, D. G, marked Government’s Exhibit No. 28.] . Mr. Sacar: The first paragraph of the attached letter in Exhibit 28 reads: f “This letter is a joint communication of [248] Messrs. Gallop, Climenko, and Gould Tun Covnr: Of whom, please? Mu. Sacar: Gallop, Climenko, and Gould. TRI Covrr: I didn’t get the first name. Mn. Sagat: Ga-l-l-o-p. Tue Court: The second one? Mn. Sacat: Olimenko—C-l-i-m-e-n-k-o. Tne Cover: And Gould? Mn. Sadar: And Gould. 0 360 Lexington Avenue, New York 17, New York, attorneys for P. Ballantine & Sons, Newark, New Jersey, and Willson, Cunningham & McClellan, 1930 Boatmen’s Bank Building, St. Louis 2, Missouri, attorneys for Fal- staff Brewing Corporation, St. Louis, Missouri.” On the third page of the proposed letter there is a sec- tion called “Reasons for the Proposed Merger.” This sec- tion reads in part as follows: tisk “The advantages of the proposed transaction to the two Companies involved are a e defensive in nature. Fal- is expected to increase. Just two items of evidence in this connection are the construction by Anheuser-Busch of a 145 bes barrel brewery in Houston, which is now underway, und the recent construction by Carling of a million- barrel bréwery in Fort Worth. To gain greater stability, it is essential that Falstaff expand its marketing territory and the logical direction of such expansion is the northeastern section of the United States. This can be aceomplished at far less cost and with much greater assurance of gaining a foothold if undertaken through the proposed joinder with Ballantine. Ballantine’s brewery in Newark, N.J., has ade- quate capacity for the production of Ballantine beer and ale and for the production of such amount of Falstaff as may be required for the northeastern markets. Through Ballan- tine’s distribution system, Falstaff could be 3 and relatively inexpensively introduced in these markets. I would like to read from the deposition of Ey Grie- sedieck—excuse me—from the deposition of Harvey [250] Beffa, Page 29. Tun Court: Once again, the date on that is what? Mr. Sagat: That is April 27, 1967. Tre Court: Page 29, questions what? Mn. Sadar: Questions 3, 4, 5, and 6. “Q. I show you Plaintiff's Exhibit No. 12, Mr. Beffa, and I note that it has a checkmark next to. your name. I ask you to read that, please, to yourself. Sir, do you recall having seen that document? “A. Yes, sir, I recall seeing ity . Did you see this in connection with the executive committee t A. Yes, sir. “Q. What this presented before the executive committee at a meeting? A. I don’t recall specifically so, but if my memory serves me correctly, this letter never went out. This was a suggested letter, but I would believe that, again calling ‘Upon memory, that this deal never got to the point where that letter went out. oe Directing you attention, sir, to Page 3 of that letter, under the sub-caption of ‘Reasons for the Proposed Merger’ and I quote, it [251] states therein: ‘It is too heavily. dependent upon a relatively small marketing itory— 7 Court: You mean Falstaff? 146 Mn. Sacat:Exxcuseme? : eee ren i Mn. Sagat: Les. ö TR Court: It is dependent upon the what? Mn. Saar: [ Continuing! 1225 1 ; 4 relatively small marketing territory and this makes it dangerously vulnerable to the inroads of competition, particularly by the national brands.’ Did you at that time consider that statement to be true?” Now, on Page 30— 8 IA Counr: Was that question answered “Did you con- sider that statement true?” Was that a question? Mn. Sacat: That is a question. The answer is on Page 30. “A. Let me see what you quoted there. Where do you start?” | Then on Page 30 I will read questions 1, 2, 3, 4, and 5. “Q. Third sentence, sir. “A. I presume at that time it was. [252] . Did you believe it to be true at that time? “A Well, I would suspect so. It was back in 1964. „. Would this be a letter that would require the ap- proval of at least the executive committee to send for- ward? 4A. Well, matters of this kind, our general counsel usually take it up and we depend pretty well on our gen- eral counsel. “Q, Would it be required that you approve that this will be forwarded, however, outside of Falstaff? “A, I would say that we go along pretty well with our general counsel’s recommendations. „. Would the. general counsel be allowed to send this out without submitting it first to the executive committee! 4. T think it’s a matter of good business practice. He usually presents these basically to the executive committee, but I again repeat, I don't think this letter ever was sent.” On Page 31 I will read questions 1, 2, 3, 4, 5, and 6. Going on with it: To gain greater stability, it is es. sential that Falstaff expand its marketing territory and the logical direction [253] of such expansion is the north- 147 ‘- eastern section of the United States.“ Would yon believe that to be true at the time? “A. Yes, I would think so. “Q. Do you believe that to be true also in 1964 “A. I would think so, yes. . What was it that made the logical direction of such expansion the northeast? “A, Well, here’s an opportunity of a pretty good market. It was in the trend of expansion of our objective of na- tional distribution. “Q. Was this the only logical direction in which Falstaff eould have expanded at that time, geographical expansion, that is? A. Was this the only? “Q. Yes. “A. I think an opportunity was there which certainly would give us—again, the reaching of our objective of na- tional distribution. “Q. The opportunity to which you refer, sir, is a Ballan- tine acquisition? A. Well, not necessarily.” I am now reading on Page 32, questions 1 through 5. . This letter deals with the Ballantine acquisition, does it not? [254] “A. Yes, sir. . What was the opportunity other than Ballantine that presented itself at this time, February 8, 1964! A. Well, if I recall, sir, we had discussed the Narragan- bett prior to that, and then had been discussing this one _ here, which did not materialize, as you know. . Do you recall when the Narrangansett discussions oye ll, again drawing from memory, I think we ce that back in 61 and then re-activated it sometime in . Sometime in 641 1 I think so. Tm quoting from memory. n Cover: 5 148 Mr. Sacat: W-e-m-h-o-e-r-n-e-r. 1 iti Tun Court: When was that taken, counsel? Mn. Sacat : It was taken on May 1, 1967. I will read from Page 2, questions 1 through 6. _ ‘Tae Court: Page 2, 1 through 6. Very well. [255] Mn Sacar: [Reading] 0. Win you state your full name, please, sir? 4A. John Howard:Wemhoerner. . Will you state the name of your current employer? „A. Falstaff Brewing Company. . And your current position with Falstaff? “A. Vice-President, Finance. 8 . And for how long a period of time have you been Vice-President of Finance? “A, 1964, I believe it was. 40. And prior to 1964, were you with Falstaff? A. Oh, yes. 8 s : . And what position did you have with them at that time? “A. Comptroller and Treasurer.“ On Page 3 1 will read questions 1 through 6. 40. Do you recall the year when you became Comptrol- ler? “A. No, I don't. „. Was it prior to 19607 8 I’d have to check on that. I don’t recall the exact te, : #Q. In December, 1963, were you then the Comptroller! “A. Yes. [256] . And could you give us a description of your duties as Comptroller? “A, Well, the main thing was to control the finances, in charge of all finances of the corporation, and also through an assistant in charge of the accounting. . Was it a part of your duties as Comptroller to ad- vise the Falstaff Corporation on any matters which would ö VVG expanding its fa- ilities ! „A. It would be in conference with other officers of the . And your participation in that conference would be in relation to the financial aspects ? A. That's right.” On Page 6, question 5. “Q. Was there any question at that time, December, 1963, that Falstaff would be able to raise the amount indi- cated of $35,500,000? “A. I don’t think there was any question.” I would like to offer as Exhibit 29 a memorandum dated 12/12/63, entitled “Meeting Re East Co.” Tre Court: “Meeting Re“ Mr. Sacar: “—East Co.” “Meeting Re East Co.” [257] THe Court: E-a-s-t? Mn. Sacat: Yes, your Honor. Te Court: Exhibit 29. It may be so marked. [Copy of memorandum dated 12/12/63, entitled “Meeting Re East Co.,” marked Government’s Ex- — hibit No. 29.] Mr. Sacat: In reference to that document, in part I will read from the deposition of Joseph Griesedieck on Page 131, questions 1 through 8. Tue Court: Is this the same deposition that we have been referring to earlier or is this another one? * Mx. Saar: This is the same one. Tx Counr: That was taken in May! Mn. Saar: April 26, 1967. Tue Covnr: April 26, 1967 Mn. Saar: Yes. Tue Court: Questions numbers what, please? * 5 Sagat: This will be questions 1 through 8 on Page . I'd like to have this document headed with the date Thursday, 12-12-63, and noted 2:45 P. M., St. Louis Meeting re: east company marked Exhibit Number 11. . Mr. Griesedieck, I’m going to show you Exhibit 11. I have to apologize for the light color of it but I’m sure you tan [258] sympathize with us. That is what we received. A. That is about what we received, too. „. Do you recognize the handwriting on that document? A. Yes; I think that is Mr. Wehmueller's handwriting.” Tur Cover: Is that the same individual to whose deposi- “on you referred a moment ago? 150 Mn. Sacar: Your Honor, I think it is. I think that the name in this deposition is mis [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_0111%3A1. Public record. Not legal advice.