Document Ne65eL9RaMw7yK9e5Dw7Y2Dbb

'- "y - / <r ,/- - /- r7~ "1 n(tti &tatrt ol Smtrka before tfjc Jfeberal tEratre Commtetfton Dockot Ko. 5253. C-U/'Va -n ^.^ I'lTKIVKU (X NOV 1G 1348 *\ Isr mi Hum or RET NATIONAL LEAD COMPANY,' * o o mo b a t io k , EAOLE-PICIIEB LEAD COMPANY, a o o mo a a j io *, EAOLE-PICHER SALES COMPANY, a ooaroaAnor, ANACONDA COPPER MININO COMPANY, a o o bt o bat io x , INTERNATIONAL SMELTING & REFININO COMPANY, A OOBrOEATIOW, TUB SHERWIN-WILLIAMS COMPANY, a o o bt o bat j o s , and THE OLIDDEN COMPANY, a coaroEATioir. BRIEF ON BEHALF OF THE SHEBWIN-WILUAUS COMPANY Ba y w o md N. Biu i, T. J. MoDowszx, Ja mm T. Ws l o ii, Ailorntyt [or Shenein-Willusms Company, Of Counsel: Da t o *, Bic iibe b o , Bb mb , Bv b ic k A Ric u a bmo k Washington, D. C. 815 Fifloonlh Street, N. W. I N40045 hMif kim t.Au<A 1 I I I \ si=> S cd c o SI" 3- g w ^,<< - * *1Iif ^ ^__ --CD S. g: " e; f SI 1r> sf 3 3 r+ = 11 "1 i ] INDEX Page I. PalLlMtNASY STATEMENT ........................................................................ 1 IL Puumxoa .................................................................................... 4 A. Scopo of Count 1 of Amended Complaint..................... 4 B. Affirmative Dofonacs Raised in Shcrwin's Answer ... G i' III. PaocEEoixoa Bxrona Te ial Ex a min e e ................................... 7 A. Exception* to and Appeals from Rulings..................... 7 B. The Trial Examiner'* Recommended Decision........... 7 IV. Ba o x o x o u x o or Pa s t ie s a n d t h e In d u b t u t In v o l v e d ........ 8 V. Tb x laetna .................................................................................. 9 VL St a t x j ims t or Pac t s --Co u n t I............................................... 9 A. Preliminary Statement ..................................................... 9 B. Sherwin'a Participation in Lead Industries Associa tion and the Meetings Held Under Its Sponsorship in 1933-1934................................................................................ 10 < C. Sbenrin'* Pricing Plan for Keg Product*................... 14 1. Less Than Carload Shipment*--F.O.B. Shipping Point.................................................................................. a. Description of Sherwin'a Shipping Point Sys tem .......................................................................... b. I* Sherwin'a Shipping Point 8ystcm Different From National's Old Free Delivery and Equali sation Point System!............................................ 14 14 13 e. Ia Sherwin's Shipping Point System Different From the Zone System Used by National and Eagle Since 19331 ................................................. 17 d. Difference In Results From Operation of Two System* .................................................................. e. Extent of Ue of Shipping Point System for L.C.L. Shipments......................... 18 21 f. Keg Products on Paeiflo Coast........................... 28 2. Carload Shipments of Keg Product*--P. 0. B. Des tination ......................................................................... 28 D. Dry Prodacta ................................................................. 1. Dry White Lead .... 2. Dry Red Lead andLilhargo in L.C. L. Lot................ 39 30 31 3. Dry Rod Lead andLithargo inCar Lot*................... 31 i i t i ir! |.v' - > "1 cror.o<= 5' ei to -- -*< a o. (0 --' CO m. _ Col . a --T o <-> -- t= ^ 3o> rr =~ =j eo -- O o o i. CO it GO i niUb Statts of ZfmtrUa Retort tf)t jftfceral tErate (Commtefwn Docket No. 5253. Ik t h i Ma t t e s or NATIONAL LEAD COMPANY, a c o r i-o e a t io *, EAOLE-PICIIER LEAD COMPANY, a o o s t o e at io x , EAGLE-PICHER SALES COMPANY, a c o w o r a t io k , ANACONDA COPPER MININO COMPANY, a cowoRATtox. INTERNATIONAL SMELTINO & REFIN1NQ OOMPANY, V- A OsrOSATlOK, v'i THE SHEBWIN-WTLLtAMS COMPANY, a c o r iu ea t io k , nd ,;>vTIIB GLIDDEN COMPANY, a c o r w s a t io k . mv .'4 - --------------------- w n*-x. Ml ON BXHALT OP THE SHEBWTN-'WTI.T.IAMa OOMPANY L PRELIMINARY STATEMENT. - The record In this c a m U voluminous, consisting of 4,398 pages : of testimony and oeversl thousand pages of documentary exhibit*, hot only small part directly involves this respondent. Counsel for The' Sberwtn-WUlIsms Company, hereafter called Sberwla, con tend that the record discloses 8henrin's activities and pricing poli cies were different from those of any other respondent and that a careful and Individual atndy mutt be made of Ibote portions of the record dealing with 8berwin's practices if the Commission ti to havt before It a eonrect understanding of what the record contains, and falls W ooolain, so far as Sherwtn is concerned. We bellev* tliat we '<& assist the Commission beat by submitting briefs directed prl- I cm*"t -JfUta) o=->+* 'X"n = -- = ro " -* < - w 51 S, ^ -- =^ CO I-*- --j cg-" % O r+ ^ 3a 3 r* =r rr CD o v.:; a 3 narily (o a dotallod presentation of tbo portlnont facts with a mini- respondents bnvo plnnl*. So, Shsrwln has no territory whatever anm of aupportlng argument. Thus, tho Commtulon, having a full indaritandlng of the record facta, will know to just what oilont Commission's Counsel, aa proponents of an order, have, or havo not, met the varloaa harden*, jurisdictional and other, placed upon them by the varioue Act* of Congress here Involved. This approach to the record ahoald male* the Commlaalon's adjodteatlve burdon, aa atatod In Buie XXV, aa easier one. '/ 'Essentially this ease Involves a charge that all of the respond ents herein have'entered Into and carried oot an Illegal agreement to fix and maintain uniform and Identical dollvered prices for lead pigments through the adoption and use of sane pricing systems whereby all purchasers In each aoiw pay the same delivered prtee to all respondents. where it has a freight advantage ovsr ths other respondents. In all thu previous cose* Involving tone, basing point and freight equal!ration ey*tcm* doeldcd by tlio Commt**lon and tha Courts eaoh I of Iho rcspondonte had omo territory surroumllng Its plant whsro It had a freight ndvantago which it refrained from utilising In return for tho reciprocal forboaranco of tho other respondeat* In tholr respective freight advantage territories. Under suoh elr* cummin-os tho Commission Inferred the exlstoneo of an agreement from such mutual forbearance. Here the Commission Is confronted, so far as Sherwln W concerned, with an entirely different situation. Sherwln has no territorial advantage giving it a lovsrsg* which ! It could use on the other respondents. The Commission ha* no 1 bash* for Indulging In any inference, as to Sherwln, such aa ' Sherwln has (looled that It uses a aono pricing eystem and ! the one nbovo described. Tho Commission should be aware, at tbs outset, that this Industry has fewer ;.roduetng units and a higher has also denied that any of Its pricing practices which may be similar to those of any of tha other respondents wero adopted by it as a result of any agroemont, direct or tacit, to do so. The reoord_will.show that Sherwin's pricing eystem, which Is known as a j ; j degree of concentration In the two leaders, Kallonil and Eagle, than any Industry against which the Commission has proceeded < heretofore. One respondent hat given up the lead pigment buslnost elnco Ibis proceeding began and sold Its plant to Eagle which .shipping point system, is vory different from a tone pricing system. OShcrwin's pricing system, which It began using many years before ',tho> adoption ` of a sons system by any of tbe other respondents, O; is built around Its warehouse system under whieh It maintains moro than fifty .warehouses strategically located throughout tho United o . States for the purpose of dletrihutlog its paint and other prod* COucU.",'The sale of the lead pigmenta Involved In this proceeding jt<iTOM' a very Insignificant part of the overall buslaess trans- COacted by Sherwln through these wtrobouses. 'Sherwln sets Its * pries on the basis of free delivery at all of its Afty-threo warehouse polata wtlb each nuslomer paying the freight cost therefrom to .Us. own- destination. Under this system It Is imp/w.tvu tha > is the aecond largest producer. Shsrwin't position Is already pre- ! carious duo to tho small volume of Us lead pigment business. Any action which the Commission might oonsldor taking heroin i will havo to bo predicated U|ion tho proposition that the puhllo In* toroid will bo served best thereby. The Congressional mandats from which Its right to proceed In this cate arise* requires ths Commission . to consider nnd determine what action Is In the public Interest. Obvi ously this requirement refer* to public Interest in its broad acnao and Includes consideration of tbo Impact u]K>n llie public generally, as well a* upon tbe respondents, of any corrective actloh width might bo contemplated. Tho final and total effect of an order may prodoea. .dattiwad cost to purchasers located at all points other under some circumstances, results which crests now situations of ;jfew ettls* to be watched with, or at a fixed differential from, tha - deUrvrsd eoct to purchasers who buy from the other rsepondeuU , en a delivered prioe basis. This system Is very dtffsrsnt from delivered, pries system in that It does reflect tbo difference* In ,';oost of delivery from Sherwin'a wsrehoose points to ths vsrious .porchassr's respective locations and to that purchaser* located at, near,'the wsrehoose points do obtain the benefit thereof. "y.. further, the reoord will ahow that Sbsrwln is In a different position.from aay othsr respondeat herein due to the faot that ;{lts ringls manufacturing plant Ls located In the same city where other much greater potential injury, from tho standpoint of tho ovor-all public Inlorest, than any which might arise from tha acta ( complained of. If tho Commission should Issue un ordsr againit.; Biterwtn, It probably will bs driven out of the Industry with tbo result ; that there will bo an evon greater concentration In ths hands of two or ,, three producers. If tbe Commission should Issue aa order which re- j qulree, In effect, that all manufacturer* opeiat* on a mill pries basts . than tha Commission will hand over to tome respondents large geo- ; graphical aoetlan* of the country aa tholr exoluitve territories ond '. take away from Sherwln the right and tbo ability to oompote and sell < N 4 In any portion of the United Slate* except tho relatively traall terrl. tory In which Chicago has a freight advantage. Even there It will bo ; competing with producer! who alio have exclnilve territorle*. "We '.oontend that tha pnblie Interest doei not require each actlorv and, under tho aitnatlon here prevailing, doei not warrant It and wilt not ; .be served beet thereby. The record will al*o ihow there haa been a oomplete failnre of proof insofar as the chargee of the Amended , Complaint apply to fiherwin. ' 'We will develop theeo varione point* by presenting a dotailed statement, supported by adequate citations, a* to Just what tbo ' record ahowa concerning Shorwin's activities. What Sherwln did, and did not do, are the only criteria as to what action should be taken ralaUrt to It. We contend that tho record l* devoid of sub'stantial orldonco that Sherwln followed the pricing practice* of the . other respondent* or that 8herwtn unlawfully discriminated In price ',1 b*twoen competing customer* to the Injury of any of them, or of any ,...;of their respective customers, or to th* Injury of any of Its own competitor*. W* propose to ehow that at directly and plainly aa . possible. a njuumros. ;'.:l VI;;,,. .- Boope of Count I of Amended Complaint. \ ' Paragraph Seven of Count I of the Amended Complaint (Sob- ;;7 paragraph B) aeta forth In general term# the activities which ware ; allegedly pursued through cooperation, combination and conspiracy ; ; and which constitute the baste of the ebargoe In Count I. Tara;rgraplis Eight and Nine specify tbs detailed procedures which were allegedly used In carrying ont certain of thoee activities, pertlcu- ' . . larly those generally described In Items 1, 2, B and 0 of 8nbpar. . graph B of Paragraph Seven. Paragraph Ten of Count I charges j,v that tha acts specified In Paragraphs Eight and Nina were utilised ,., 'la furtherance of an alleged effort to match prioei of all respond- ;a *1 *U destination* which effort Is described In Item 2 in Subparagraph B cf Paragraph Seven. The remaining paragraphs / of' Ooui I detail the allefud effeote of coeb praetloee end avor ! "that such practices violate Section 6 of th* Federal Trad* Com-.mlselmt Aot All of the foregoing paragraphs ars eonoernod only . with activities allegedly pursued under a oommon plan of action which was conspiratorial in character. They ars not oonoerned with ^/individual action. > V1>i'\".... / ____ ta>jp--i s.tKtjM'ianw.' tuysfW) >.ya :o>fmi ,vr. .v,v: 6 Bherwln takes sharp issue with the contention stated in tha last fire lines of tho first paragraph of that portion of the Com mission's brief entitled "The Pleadings" wherein counsel have sub stantially enlarged their proviout contentions ha fifths aoop* of the charges In Count 1 of tho Amended Complaint by urging-- "that each of tho respondents Individually has violated th* law hy engaging In and continuing unfair, oppressive, and diecriminally acts, methods, and practices In tli* sal* of lead pigments for the purpose of suppressing and restraining com petition " Such enlargement, if now permitted, wilt place an unfair burden on the respondents by subjecting them to the threat of an order to ccaso and desist from Individual aetton along certain linos without regard to whether such action art*** from a planned ocmmnn , course of action or produces an identical result. In th* proceeding 1 against the ltigld Stcol Conduit Association (Dockst 44112) slmultane- ous, but Individual, action w*s attacked as a violation of th* Fedsral \ Trade Commission Act and was litigated (Count II) but tbsr* Is no ; similar count In tha complaint hersin and th* issue la not raised t In tbo pleadings. Th* only charge with respect to Individual aa- . tlon in this oar* arise* under Count II which eharge* cash re- / pendent with violation of Sec. 2(a) of the Clayton Act, as amended. ' An enlargement of th* scope of Count I, in the manner attempted, '. la not authorised undtr either th* Administrative Procedure Act ' or the Federal Trad* Commission Act and violate* the Fifth Amend- moot to tbn Constitution. : Commission's Counsel did not make their present contention in i their proposed findings. Such proposed findings contain three sec- lions devoted to the chargee under Count L Then is no reftrssso* > to any claimed unlawful individual activity etther in those seesiace or in that portion of Section VH devoted to alleged violation* of : th* Federal Trad* Oommisaica Act. Similarly, when arguments In ( support of proposed findings war* made before th* Examiner, they,j did not urge suoh oontontlon In outlining th* coop* of th* order recommended (Tr. 4250-4211). Thts contention appear* for th* first . tlmo In tholr proposed order (Seetlon II, peg* 2). ` Th* Trial Examiner did not consider that tha plaadingt raise such issue. Th* pertinent portions of Section II of th* Trial Brain- ^ Iner's Recommended Decision (pages 3-fl) oloarly demonstrate that ; the Examiner considered Count I as Involving only cooperative ao- . tlvllles and the order recommended by him contained no prohibit j o o o CO CO - 'A . jWMtwwiuwilIl 11 I Ml IS IK iS U t d l t lld ll IIIIO notice, it is due to the quality of the document being filmed_______ tlon etmllarto the one proponed by Counsel for tlio Commission V< (HU. See. Dee. page* 00-06, Inc!,). "While Commission1* Counsel took excoptlou to tlio Kxnmliior's ..`/failure to Inolude sneh contention ni on Issuo under Count I (Coin. '/ ; Eio. I), they took no epoeine exception to hit exeluilon of Section ^11 of the Order rooomraondod by them. In vlow of tlila stalo of '<; the record, we urge tbet it would bo unlawful for tlio rospomlotil* t-v; to. be forced, to defend the propotltlon now urged that each $?; respondent hoe vlotatod the Federal Trade Commission Act by ;/!engaging lndlrldually In the aeta and praetlcee charged In Count L r Bee oleo Section VTH horoof. * %(&--* ! -B. Affirmative Defesees Raised in Bhenrin'i Aniwtr. v' r \ , ; The brief of CommUsion's Coanacl (Com. Brief P. 2*3) !<; |ccnoree the extent to which Shorwln took Issuo witli the Amcmlod V. Complaint tlirough affirmative matter eot out In It* threo apcclnl ^ defenses. (Sherwln'e Antwor.) j`):'>*-yi;Ooe apeeial defense is that Bberwin'a poritlon In tho lend pigj.Vment* Indostry la eo email and precarious, undor tho circumstances jj; prevailing, ae to preclude any of fta activities from having any dotrlf'Cmental competitive offoct which would not come undor the da minimus j'v.rule. There een be no dispute that 8herwln was by far tlio emnllcsl ` ' producer In the Industry. A full discussion of tills point te sot out v;. in Paragraph 0 of Section VI hereof. ..Another special defonso It to the effect that any pricing system !'. for itandardlaed products which reautta, trrespeettvo of tho ri-sjiccI'. tive purchaser'* distance from the aelter's factory, or of the rcla>' live location of the seller's factory and the factories of Its compctl- tors, or of other competitive factor* In a uniform not return on ;.,ol! sales, baa the necessary tondeney to eroaU territorial aplieros v'of .monopoly for some manufacturers within which spheres tliry 'J.can set or determine, within broad limits, the price at which they fieri able to MU and ilill prevent any competitor having u freight :disadvantage from competing In euch territory and also to ultl;; mataly- eliminate the smaller manufacturer*, such aa Hliorwln, and i; thereby to eubstanllally lesson, hinder, restrict end suppress oomr petition and. to create and encourage monopolies. A full discus- ' slon of this point Is set out In Paragraph 0 of Section VI hereof, j. The third speolal defense raises a point of law eoneomtng tlio ;definition.to be given to the word "price" in applying Sec. !2{n) : of.the Clayton Act, as amended. : V. . *,S T UL PBOOZEDmaS BB70&Z TRIAL SXAMXHBB. A, Zxeeptlon* to and Appeals From Reding*. By agreement of Counsel (Tr. 4073-4071) which w* approved by tho Commission (Order of November 18, 1047) exceptions to end appeals from ruling* of the Trial Examiner are to be submitted simultaneously with the brief* herein. Bherwin's appeal* from such ruling* will he filed slmultsneouily with this brief. B. The Trial Examiner's Recommended Decision. Sberwln egroes with the Examiner's Recommended Decision ' Insofar as tho Examiner found that Slierwln did use a shipping point' system, r&tbor Ilian a tono system (Ex. Roe.-Doer-par. 4d, p. 191 par. fiefi, p. 30 and par. 7s3, p. 39), but objects and oxoept* to the Examiner's conclusion. In the face of such finding*, that all retpon-; dents conspired and agreed to adopt uniform prices and an Identical j tone eystom. Sherwln also agrees with the Eiamlner's Beoom- mended Decision Insofar as the Examiner found that, under the facte | hers, thu charge of a flat uniform price within a particular son* did ) not violate the Clayton Act as amended by the Robinson Patman Act for the reasons that there was no discrimination In priee and no In jury to or losaontng of competition (Ex. Roe. Deo. par. 10 g, p. flfli par. 11c, p. 65-60). Fortbor, Sliorwlu agreet with tho finding that the wlilte lead quantity discounts, the container differentials and the rod lead quality differentials were not discriminatory and had no, adverse effect on competition (Ex. Ree. Dee. par. 10-1, par. 10-k, par. 10-e, par. 11-d). ) Bhorwin objects to and disagrees with the Examiner'* Beoom- ' mended Decision In certain other respects, and, pursuant to Bale : XX111, hat filed It* exoeptlens to each tpeeifio finding* and eon- 1 elusions. Some are predicated upon the proposition that the Examiner did not conform to the requirements of Rale XXH. Many, i bowever, are based on the faot that the Examiner erroneously r*-^ ported the status of the reeord with respeot to nneontradleted too- ; tlmony. It Is requested that eteh of these exceptions he evaloaUd ) before any conclusions are reached t* to what Sherwln did or did not do. A supplemental statement of the basis for some of eueh ax- . ceptlona appear* a* Appendix 1 hereto. \ being filmed tv. BACKGROUND or PARTUS AND THE INDUSTRY ) INVOLVED. / j. ,. Bherwin objects to (but portion of the Commission's brief cn- i\: titled "Background of Parties and the Industry Involved", In the rl . following particular*: l,'( * " 1. It 1* not revealed that aulphato white load t* uid Inter- ebangeably and oomprtttlvely with earbonato whlto lead l>y xlo ; '< (Dr. 3344-3352) | that when Eoglo'e production of lulphato U added kto Ite production of earbonato, it* poeltion in tho Industry more noarly ('V-. approaehee National'! poeltion than originally Indicated In tho early . stage* of tbo proceedings and that, aa a consequence thoroof, fiber* , win'* percentage position In wlilto lead production and tale is oven lower than was originally Indicated. 2* deecrlblng Shorwln'a dletrlbutlon of load pigments tho etatomont Is made that inch dlitrlbntlon is "throughout tho coun- ' try". Actually Sborwln does not sell dry red lead or litharge fat:: oa Pldo Coaet (Tr. 13H, Tr. 2066). Its sates of llthargo ^tVar* oonfined almost entirely to pointa In tho Chicago area with a fa. ' lew Isolated ahtpmenta to Kentucky and Ohio (Tr. 20G8). A Shorwtn objects to reference to Ite aaloi of load pigments &" through Us wholly owned retail store*. Sberwln'e asloe in Its own 'I'-"' retaU store* origtnata, and art completed, within the eonflnea of a S/;v7 single stats and are purely Intrastate tales. While the Examiner | obviously mlsoonstrued the extent of the findings of fact (fiber- . win's Proposed Findings, Par, 5) and the Conelnslon of Law (#1) ft.-' proposed by Bherwin concerning Ita retell store sales be dhl ae- 5f. . tSilly grant tbo finding and tbs ooneluslon of law to the extent V. ; rsqueeted. Aa to these proposals the Examiner rated "Paragraph VV 6 (Sbenrln's Proposed Findings of Fact) Is allowed except ns to p the term `negligible' end as to all transactions being Intrastate. V>', The record shows that fihorwln sold Interstate," and "Paragraph f,' 1 (Sberwln'e Proposed Ooneluslon* of Law) l. allowed as applying f.;,' .to a large portion of lie business but not to all, but tho evhlcneo { .' 'I* sufficient to show that Shorwtn Is In commerce as defined ami Is I',, therefore eubjoct to tho Acte opcctfled". No olalm wn* ovor mado I' : that Sberwln was not engaged In Intorstato commerco aa to some [ types of sales. It wa# only contended that the ealos in 8berwlii'e roV taU store* were intrastate tranaacllon* and, for that reason, not oub- Joct to tho Commission'* Jurisdiction. That contention ii pro*per end y;. M: ) I i i i i I should bo sustained. (Fed. Trade Com. v. Bunt* Brat. 312 U. S. 349.) Assuming, but not conceding, that an order to eeaao and desist it to bo Issue*.! against Bherwin, it li perfectly obvious that such order should t)>ecti1caUy exompt transaction* growing ont of Sborwln'a rotalt atoro operations. 4. It li stated that Shorwtn accounts for 6% or 614 of th*. total shipments. This statomont applies only to carbonate whit* !cod-ln-oil and not to any of tho other products (Tr. 1331-1332). Wbon sulplialo is takon Into aocount Bherwin'* poroentage it eves . lower. T'lr many years its dry carbonate and ilthrag* shipment*; to customers represented les* than 194, respeotlvely, of total in dustry stdpmonta while Us red load, dry and in oil, shipments to customem were "praotlcally nil" (Tr. 1331-1332). V. The Issue*. For brovlty fihorwln adopts tho statements by Couneat for j National Lead Company as to tbo liana* actually Involved In th* , proooodlng, but celts attention to Item C In Section VI of th* Com- ' mission's brief which Involve* the same proposition aa is raised; In the la it five line* of the first paragraph of Boction II thereof ' and which ts disposed of In Paragraph A of Section U and in Seo- Con VUI hereof. VL STATEMENT OT FACTS--COUNT X. A. Preliminary 8tatamest. Count I raises the baelo tseu* of whether there was an agree-1 mint among and between all of tb* respondents to follow a planned. common course of action through the adoption and malntonsno* of I "a fixed plan or formula of quoting delivered price* according to ; rones or territories, and In support thereof * * * agreed terms; and conditions of sale by wbtcb competition hat been reduoed, nnl-< llflod and ollrainatod" (Com. Brief, page* 6 sad 7). Commie*Ion's ) Counsel concedo (Com. Brief, page 16) that the reoord refleota no I aclnal agreement whoroby each of th* respondent* undertook to^ egreo with each of tho other* to malotstn th* sou* system, th* . egoney plon or tho other trade practices involved. They contend, ' however, that wbon the rospondeuts, and other* not partis* hereto, ^ wore bolding v"rlous mooting* In 1933 and A934-or' th* purpose .' of formulillng an N. lb A. Code for tb* industry th# rsap^ndaat* discussed and elmulloncoutly adopted and eubsequently followed | I 5 being filmed cr-o zs CO CO 3 CO to ~ O- _ cco --r o 2o 3 ,-r ro =r r =j a ~ 10 * the practices pec!fled In Subparagraph B of Paragraph Sevan and In Paragraph Eight ami Nine of Count I and that such slmultaneoua action vraa equivalent to and comtUnted the agreement charged In Paragraph Six of Count I. (Com. Brief, page lfl Cora. Propoaed Findings, Sec. lit, pcgee 13-28). B. Bharwin'i Participation In Lead Industrie* Aasodetlon and the Meeting* Held Under Ite Sponsorship In 1913-1931. Other reapondonte will present full iteteraente relative to the nature and scope of the aetlvitlea of the respondents during the N. B. A. Codo period ami the legal offect thereof. In ordor to mlnlmlxo repetition, ws adopt such factual statements and support ing arguments. Throughout tbo Commission '* brlof the theme is that tho reepondsnta held those meetings for tho ostensible purpose of draft ing a codo for the industry undor N. It, A. but actually and unlaw fully "treated this opportunity of drafting a code as one of com pletely overhauling, cooporattvoly and by agreement and under standing, alt of the trade practices In tho industry" (Com. Brief, page 11). Unquestionably there was discussion of tbo agency plan and tones and the Codo, as finally approved, did not Ineludo pro visions relative to those subjects or to eome others that woro dis cussed. Bach dlsouislon, however, affords no basil for the claim ' that all of the respondents, despite the elimination of such prorl- lions from ths Code after discussion, sgrssd to adept and main* tain various trade practices outside the scops af the Code. Of courts, the N. B. A. legislation was lator invalidated by the 8upremo Court bnt st tho time these meetings were held N. It. A. wss the law of the land. To the oxtent trado practices were Incorporated . In a coda which waa approved by the N. B, A. Administrator, some relief from the throat of prosecution under the Antitrust laws . was affordod. There wet no reason for sllmlnstlng those practices from the Code If they were to be made the subject cf some other agreement. In fact, tbero was ovory reason for lnoludlng tbim In the Code If all were In agreement At the very least a color of /legality would have been obtained. -I.-. . It Is apparant from ths minute* of th* meetings that there ; was not complete agreement by all as to th* agency plan or as to : some ether matters discussed. Vfe contend that this lack of sgro*. .ment, rather than a desire to aocompllth Illegal acts by seoret agreements, was the cause for the omission. Throughout ths meet ing* th* members evldonced evory intent to do only what could be 11 done legally. Tho Uniform Bases of Sale which later became "Schodulo A" and which Includod many of the practlooe her* chal lenged was "submitted to N. B. A. subject to approval of Ita le gality" (CX NUB). Commission's Counsel contend that thero wai agreement by all to adopt and follow tho terms and conditions of eal* set forth tliorotn Irrespective of tho Codo. How can that eontentlcn be sound when tho record shows that tho industry obtained at least two extensions for tho effective date of Schedule A (CX 6070, CX 607A-M) and falls to show that It evor became an effective part of tho Code! What possible reason could be member* of th* In dustry hare for obtaining the** sxUnalons If they had actually agreed to adopt and follow th* standard Urtn* and ooadltloni of salt lnoludsd In Echtdul* AT The questions answer themselves. It would have been ridiculous, when the Inclusion of these provi sions In the Code would bsvo sffordod st least a measure of Im munity, for respondents to petition tor and obtain th* exemption* If they notimtly ptannod, a* a group, to adopt and follow each pro- . vlstons. There was no such agreement outeld* of the Code csgo- <i tiallons and there Is no evidence of th* exlsteno* of any each agree ment. Logo! mtvlcc was requested as to whether th* Uniform Bases of Sale (Schedule A) could be Installed by agreement before final adoption and approval of th* God*. A recommendation waa mad* that tbo procedure should not be undertaken but that one member could adopt It and then tho others could voluntarily follow It If It was to Ihctr best Individual Interest to do so (CX S22B), This was in October 11)33. Tho Coils was approved on May 34, 1934 (CX 809). There waa no legal advice that such provisions war* not ones which conld properly be Included In th* Code. It was ! only recommended that there should be no adoption thsraof prior 1 to th* approval of th* God* by th* Government (OX 623B). Th* euggcstlon for voluntary action waa obviously intended as a temporary expediency until tho Code was appruvod. It was approved and th* In- i elusion of Schodulo A was also approved. Yet tor tlx months or mors , ! thereafter tho Industry wss active In preventing Schednl* A from v] becoming effective. If there waa any real and continuing desire on the part of alt to fottow tho provision* theroof then certainly no effort ' would hnvo been made to delay the effectiveness thereof under the ` protection or the N. It. A. Code. The truth of ths matter Is thsro \ wss no such agreement by all. o o o CO CO 1 t 12 W# do not question the right of tlio Commission to draw In ference* bat w* contend that tho Commission, la drawing Infer- no**, moot follow tho principle! announced by the court!. Wo eoll attention to tho dcclilon of the Circuit Court of Appeals (3rd) far the oaoo of J, D. Lippincoll r. V. T. C. (137 F. 2nd 490) wherein the court hold) "Evidence which ii entirely elrcumitantial and which equally npporti either of two oppoeed or lncomiitent inference! can not of itaelf be daemed to furnish lubetantia! aupport for one of inch Inference! to tho oxclutlon of tho othor. Heo Pewneytooaio Railroad Co. v. Chamber in, 288 U. 8. 333, 339, and eeioe . there cited. In connection with finding! of an administrative body, it vat laid In Appalachian Electric Power Co. r. National Labor Relatione Board, 93 F. (2d) 089, 089 (C. C. A. 4), that evidence `which give! equal aupport to Inconatitent lnforoneea' ia not substantial. See alao fi'otlonai Labor AriaMans board . Ban Shipbuilding el Dry Dock Co., 139 T, (2d) 19 (C. 0. A. , When that principle la applied to the facta herein, there !a no ' proper boala for an Inferenoo that the mooting* served a* a eloak for the adoption of Illegal aetlrltloe and agreement*. Sherwin ho* been a member of LIA alnce Ita Inception In 1028 (CX 408 A-X, Tr. 996, 1010), hot hoi never been represented on it* board of dlreotor* or It* executive committee (CX 499 A-Il, Tr. 1011). Bbonrla wu not reprceeatod at the first meeting of the toad Pigment* Diriiloa of LIA bold on Jaly 20, 1933, where tbtro r wai "n diicasatou of enltabte trodo pracllooa to Incorporate In a T eupplemontal code for the Lead PIgmenU Dlvlaion" (CX 799). !, ..-Immediately after thl* Aral meeting repreaentetlvea of all pro- r ; daeen. Including acme who are net reapondanta herein, were noti fied "Will yon kindly eepply the Committee with thoao ttome i: that xnlgbt properly be dtecueeed at the meeting on Auguat 8 with j reapeut to a eupplrmentery code of fair competition" (CX 008D). r. Sherwin waa repreaeuted, na ware other couoorna not respondents ; herein, at enbeequent mootlnji ef aahoommltteea of tho Lead Pig. menu Divlelon of LIA (CX 601 A-D, 802 A-0, 601 AB, 609 AB, 800 A-C, 801 AB, 803, 805, Tr. 1330), but there 1* no ovidcnce that [ Shenrln'i representative did anything other than attend aueh raeet- ,K Ingi end writ* one letter merely elating approval of tho second j: .< Mm rode (CX 615 K). Wiito not propoae to dlaeuaa horo li . " hut tho record i* clear that Sborwin openly op- poaod It when It waa dlaeoaaed end did not aver adopt It (CX 800 13 E, 712 A, Tr. 3701). There wa* much eorrchporfdoue* between the repreaentetlvea of ell other reapondenta concerning the vorloua matter* discussed nt tlie meetings, aucli na xonlug, tho agnney plan nnd term* and condition* of *a!o, but thoro la no testimony that Sherwin patticlpatcd therein. All aetlvltica of tbeae committee* ceaaed In 1939 after the dociiion of the Supreme Court In the Schechter cn*o (Tr. 998). Tho white lead group of LIA became actlvo again In the late 1930't In promotional work to etlmutate the uae of wlilte lead (Tr. 998), bnl Sherwin wan not represented (CX 600 B). There la no evidence that any reprcaentnllvo of Sherwin over took any part In nny activity of ltd* Committee or of the Annotation inboequant to May 1039 or attended lie meeting* thereeftor (Tr. 1330). So far a* tho record dleetoee* the only contact which Sherwin ha* malntnlnod with LIA alnce 1936 la the filing of monthly report* allowing lie volume of aalta, production and atock* on band (Tr. 1330) and tb* receipt of a eompoalte report, eneh an OX 670, from th* Aeaoelatlon which contain* merely n combined total figar* for each product category without reveetlng In any manner Indi vidual producer's ihipmenta, production or atock* on hand (Tr. 1330-1331, 2101, 2186-2100). Tho Aeaoeiatlan reports era alao fur nished to varloui departments of the U. 8. Qorornment, each as the Deportment of Justice, Federal Trado Commission, Bureau of Mines, Geological Survey, U. 8. Tariff Commission and Bureau of Foreign and Domestic Commerce (Tr. "188). Sherwin has never filed either current or historical price Information or aUteraeata as to Its term* and conditions of sal* with LIA before, daring or subeequen. to N. R. A. (Tr. 2102, 2188). Tho Trial Examiner** Recommended Declalon confirm* tho foregoing slatemouU (Ex. Bao. Dec. I'ar. 9n0). Commission'* Counsel baa conceded that prlc* filing Is not an Nsuo In tlio ease (Tr. 2103). Evan though Sbarwin con detormina U* own perccntngo poeUlon in the luduelry by ualng the l.IA rcjiorte, (Tr. 1331) there la no evldonoo that Sherwin !* thereby furnlihcd with Information which It could unlawfully use In calculating, determining and announcing Its quotations. Th* foregoing constltuU* * full redial of all th* rvtdeuo* don eeruing Bherwin'i participation In th* 1933-1934 meetings bald under the sponsorship of t-fh. and lta relationship to LIA from lta Inception to th* present date. The eharges In Items 3 and 4 of Subparagraph U of Paragraph Seven of Count I cannot bo sus tained as to Sherwin on the basts of aueh sridenos. > o o !O CO CO I trn <0 c do =; m rf. to c=+r- <A t (D CX. ecl cp r o r+ e 3o rr+r rra <0 1* 0. Bhenrln's Pricing Plan Tor Kef Products. The Amended Complaint charge* that th respondent* ltavo adopted and maintained (1) a delivered price system which provent* reflection of any difference* in the eot of delivery from the respective place* of manafaeturo of reipondont producer* to the mpcctivo location* of purcha*or* and (2) a aono *y*tom whereby price offer* to all purehaier* of a clai* throughout any one of inch aonos, regardless of location and tho difference* in freight rate* from thlping point to destination, are matched, except that by prearrangement and onderalandlng Mio offer* made by (Hidden, Shsrwln and International aro permitted, In coma Inataneaa, to bo mad* and maintained at fixed differential* below the matched offers of National and Eagle (Items I and 2, Subparagraph B, Paragraph Seven, Count I). . Any realUtle approach to whether itlogat agreements relatlvo to prletng plana were entered Into and subsequently purauod and ' to whether any particular concern participated In and bocamo a .beneficiary of aueh Illegal agreement* mint bo prodlealed primarily ' upon (1) the extant to wbteb tho particular concern's pricing plan conforms to tho prielng plan allegedly agrtod upon and activated, ' 'and (2) upon the particular oonccrn'a competitive ability to pur' toe any InoonsUtent court* of action. li Leu than oarload hlptanU--T. 0. B. shipping point. Voreriptlon of Skerwln't Skipping Pofttl Sgttam. ' While fiborwin I* ono of tho largest manufacturer* of mixed paint, It 1* by far tho amallott producer of tho produeta involved here (Tr. 1331-1332). Its *o>e plant for tha production of load v'-'.fcilgmeaU I* located In Chicago (Tr. 1313, 3710). It has a number of warehouse* at strategically located major oltio* throughout tho United States from which it fills Its less than carload roqulrimenU of point and lead pigments (Tr. 3764-3760). Loss than car lot orders account for about DOjfc of 8borwin's lead pigmaot bust* DM4. In September 1930 there wore S3 such cities which nra here, after called shipping point* though they aro warehouse point* In overr aonto of the word (co Appendix II for map showing locn, Uon of thoo oltio*) (CX 002 5521, BX 108 A-H, Tr. 3760). Each of Bberwln'* ten dtatrlet offices prints price card* for use in such district and the only authorised t. o. It. shipping point;' for aueh district are named thereon (CX C62 2521, Tr. 3702, 3701). It 1* axprsuly stated that tho prleet quoted are f. o. b. tho namrd 16 cities (OX 602 2521). With osrtain exceptions hsrsinaftsr noted, Bhtrwln ship* all Isas than carload shipments from ths shipping point nearest the pnrohossr on freight oolleet basis ot the freight U prepaid and added to ths Invoice, (Tr. 3764-3765, 3769, 38363838, 3840-3?50, 3866, and 4106-4100). This policy applies equally to white load (dry and In oil), red lead (dry and in oil) and litharge whon shipped in less than carload shipmenta (Tr. 3748). Thia method was used by Bberwln prior to the first meeting* la the summer of 1933 (OX 662W) and has been used by Bherwin for twenty-five year* (Tr. 1312,1316-1317,3695). There Is no svidano* to ths contrary. Ai to this system tho Exsmlnor found "Sherwln sold f. o. b. various shipping points In tho par sons and elsewhere * * " (Ex. Bee. Dec. par. 4il, p. 19) t "To make accurate oomparlaona as to purchaser's cost*, small freight coata from * * * Bberwln'a hipping point* to each destination would have to he ascertained and added to their lower quotations and these would b different for each location" (Ex. Boa Doc. par. 60S, p. 30) and "Shorwin departed from the xonlng method by quoting f. o. b. various ship ping and equalisation points to many customers * * *>> (Ex Boo. Dec., par. 7a3, p. 39). In tbs first paragraph on pago 45 of their brief. Commission's Counsel adroitly Intlmato that tho Examiner found that Sherwin wot not using the shipping point system as represented yet they took exception to eaoh of the above quoted findings (Com. Ex. VII). 80, they cannot be under snob misapprehension. 6. fs SktrvnV* Skipping Point Sptlom Diforonl Prom National') Old Pro* Delivery and Equalisation Point Bytltml In their proposed llndlog* Commission's Counsel state that Bherwln contends " the present method i u* -of free de livery and equalisation points as previously utilised In the indus try prior to the conspiracy" (p. 32), and In their brief that "Shorwin it urging the unique theory that * * * lit present method of selling Is very much like the old 'differential' point tytlcm" (p. 46). Theta two (tatsmsnta do not correctly state Shenrln'a oca. tontloa. Sherwln's only fro* delivery points aro (1) those 66 odd cities whtre it maintains warehouses and can make delivery slthsr by It* own truck* or load eartago (Tr. 3766, 3768, 3776) 1 (2) those six cities (Washington, D. O, Osdtden, Alabama, Pensacola, Flor id*, Ban Diego, California, Chattanooga, Tenntuee, and 8al*m,' > ;O IO o ! CO ! CO crja CO Cl <So' -3L: 3 o> . o. rt c CO a. oo c: o 3 C=O1 16 Oregon) which Sherwin haa placed on an f. o. b. baata (Tr. 3737* 3738, 3862-3853, CX 782 F), bn', which arc not shipping points for other cities (Tr, 3739) and (3) those suburbs and environs of the cities Included In (1) and (2) (Tr. 37G8-37G9, 3830-3838). Shcrwin's free delivery points are directly related to tho location of Us warehouse stccVs and Its freight equalization Involves not n system of points but only occasional equalization against Its own normal shipping point tor Individual customers when aueli point Is tumble to ship. The rooord does not show that Shorwln has ever had any equalization points. In rare eases, because pf lack of stock, a shipment may not actually movo from tho nearest ship ping point (Tr. 3739). In such cases the freight is adjusted and equalized between the points Involved with the customor paying no more than If the shipment had come from his normal shipping point (Tr. 3T60, 3767-3760, 3839). This equalization la not predl. cated upon any oorapetltlrs situation (Tr. 3700) and Is not breed upon any predetermined list of cities. It arises only In Individual situations and la Teadlly distinguished from the so-called freight equalization Involved In the recent eases decided by the Circuit Court of Appeals for the Seventh Circuit: United Statee Holsters Association, et at. v. Federal Trade Commission, 132 F..(2mt), 101 j Theiililk and lea Cream Can Institute, et ol., r. Federal Trade Commission, 152 F. (2nd), 478, nnd Triangle Conduit ,t Cable Co., Ine. v. Federal Trade Commission, 108 F. (2nd) 175, . For many years prior to 1933 Nsttonal maintained a driivery nnd equalization point system which la Illustrated by CX 039 C-P. .Thore wore approzliualoly slz hundred such points In the . forty states cast of Ui Bocky Mountains. When deliveries were mado to other towns the freight was equalized with tho noarest equalization point (OX 639 N). We do not know how Notional ,, made 1U solvelions as to which eltles wore to bo dosignatod, but It Is patent that the aeteotlon win not made on tbo basis of aotnal location of Ita warehouso stocks and actual shipping points. The lyitssi used by Eagle before 1933 was also based on delivery nnd equalisation points whleh bod no relation to tho location of. Ita warehouse stocks or setusl shipping points. There can be no donbt bnt that prior to 1933 Bherwln used, and unw wee, Its own shipping point system and that tueh system dlffew from the delivery point and equalization systems formerly wed by National and Eagle, ! ! ! * ! ! i 17 e. Is Shenvin's Shipping Paint System Different From the Zona System Used by National and Eagle Since 10331 Tho systems are different and produce different results. Under a zone system purchasers at every point wtthtn tho zone receive tho nmo priec, nnd also the aamo total cost, from a seller using such systom. (Ex. Bee. Dee. par. 4a, p. 14-15). The map appearing in Paragraph Eight of Count I of tho Amonded Com plaint reveals that the zones are largo in area and each covers a number of states. In tho par zone (Wisconsin, Illinois, Indians, Ohio, Konlucky, West Virginia, Maryland, Delaware, Pennsyl vania, Now York, New Jersey and all the New England states) Sherwiu has only 21 shipping points) in the one-eighth osnt sons (Virginia, Minnesota, Iowa and Missouri), tl has &vej In th ono-quartor cent zono (Tonuesseo, Nebraska, Kansas, North Dakota and South Dakota), It has three) in the three-eighths oeat zone (North Carolina, South Carolina, Oeorgii, Florida, Alabama, Mis sissippi, Louisiana Bud Arkansas) It has eight) In tho one-half cent zone (Oklahoma, Colorado and Wyoming) It has three) In the throe-quartor oont zone (Tezas) It lias flvo) anil In the one cent zono (Now Mexico) it lias none. In the olgbt Pacifle Coast States (Oregon, Washington, California, Arizona, Nevada, Utah, Idaho and Montana), which nro In sovoral tones according to the com plaint, it lias right shipping points (CX CC2 Z21, RX 198 A-U, Tr. 3730, 3850) Appendix II lioroof). Sherwln's reason for locating Us shipping points In these cities Is obvious. In each of the. twelve most densely populated states whoro there is great dealer and Industrial demand for Ita paint produets It 1ms located from two to flvo warehouse* from whleh It distributes Its products. In most other states It haa loeatad only one and In riovon states It has located none. The location of three warehowre wae dictated solely by the distribution problem la Bbsrwin's major lina--the tale of ready mixed point. Commission's Counsel contend that Sherwln's bulletins such as CX 602 8T actually list Hhorwln's shipping points and that its shipping points are not limited to the 33 ettles previously named. The only dimenlty it thore t no evidence whatever to support the theory end there is substantial evidence to the contrary. Aotnally Slierwln't bulletins, such is CX 602 ST, serve an entirety dif ferent purpose for Shorwln then CX COO C-P (list of delivery, equalization sr.-J differential prints) served for National and are not part of a zone system. Shcrwin'e bulletins are applicable only to ` ' o o o CO CO - .?/. n la 8horw$n's own warehouses and retell stores whilo National used Iti lilt of 600 cities aa a guldo in priolng it* produot* to it* customer* generally. Sine* prior to 1924 (Tr. 1312,1316-1317) Sherwln ha* ctronlaUd to It* district asto* staff and representative* in its owu branch stores Us General Trad* Sale* Bnllettns (CX 662 ST) for the sole pur pose of advising them as to tbs price differential* in effect on tbs data tbtrsof '`For Sherwln-Willtams* warebouaes and stores" (Tr. 3697). Snob bulletins serve no purpose for quoting prices or making billings to any customers (Tr. 3697) and do not constitute a list of Shamin'* shipping points (Tr, 3713-3714, Tr. 3846). Lot* than carload shipments to enstomer* located in tbe eitias listed on OX 662 BT which are not shipping point* are made on a freight ooiloct basis from shipping point (Tr. 3830). The net result is that only In these 63 shipping point eittes and the suburbs or environs thereof, whore deliveries can be mads by Shemin'* own trucks or by local enrtage, and in those few cities which are sold on an f. o. b. basis is it possible for a loss than carload customer of Shemin's to receive the aamo delivered cost .a*~U-pnrch**er who buy* on a tone delivered price basis. For delivery in all th* other thousands of ciUss, town and localities, actual freight from th* shipping point is paid by Shcrwln's Its* than carload customer*. When such freight cost is added to the shipping point price, th* delivered ooet to Shemin's customers located away from its shipping point* cannot be th* tarn* as th* delivered price paid by customers of oth*r **U*n who *U on a delivered price basis and cannot be at a fixed differential therefrom. d. ZKgsrecee U Result* .From Operation o/ Two Systems, Dose the reeord show such identity of price, or fixed differs Usls In price, even in there few shipping point oltiesf The a swsr can be obtained by comparison of (1) quotations, and ( ' aotnal sals*. There Is no inch identity and no fixed dlffsrsntli The examiner made an analysla of quotations by all responden for white lead In oil during four periods (Ex. Bee. Doc. par. S< p. 29). Practically all parties excepted thareto (Com. Ex. XI Nat. Ex. 97, Gild. Ex. 40, Bber. Ex. 32), but it is correct to 1 extent of establishing tho fact that in the four periods spec!!! Shemln quoted a prioe to its dealors which was 20f, or moi lower per 100 lbs. than National and Eaglo received from their agon and which was $1.23, or more, lower per 100 lbs. then tho pri quoted by National and Eagt* to their dealers. I i I i i i ID Comparison* of quotations during other periods show that this dllferonco was not static. Beginning in March 1933 and extending for approximately ono yoar National had three classes of agents and received from them 18.13, $8.30 and $8.43 per 100 lb*, for white lead (RX168, CX 633T1) while Bhorwln wss charging its deatsrs $9.00 per 100 lbs. (CX 662Y). In January, 1937, Shamin'* quotations to dealors for white load In oil In any quantity was OV44 per pound in 100 lb. kegs (OX 622 Z3), while National's quotation to dealers ranged from UMif per pound for Isis than 600 lb*, in 100 lb. kegs to 10-144 par pound for 1,000 lb. shipments (BX 168). During Ibis period tho apread between National'* agents and doal- era was from $1.60 to $2.28 per 100 lbs. In March 1937 Shemin's quotations to dealors in any quantity was $9.80 per 100 lbs (CX 662 Z7), whilo National's quotation to dealers ranged from $120 per 100 lbs. for less than 600 lbs. to $11.73 per 100 lbs. for 1,000 lb. shipments. Its quotation to agent* wss $10.03. Its spread be tween agents and dealers during this period varied from $1.70 to $2.43 per 100 lb*. (11X. 138). At other times it was a minimum of $1.00 per 100 lbs. (RX. 138). National had 300 lb. quantity and . , 1,000 lb. quantity discounts during tbeso last two periods whil* Bhorwln ofTorod no quantity discount. Tho Examiner also made an analysis of actual priosa obtained ! by all respondent* for whit* lead In oil during three separate three month ported* (Ex. Boo. Deo. par. 6c6, ami par. 6c7, pagss 30-33). Both Shemln (Slier. Ex. 36, 37, 38, and 39) and Counsel for the Commission (Com. Ex. XIII and XIV) exoepted to th* analysis and tho findings mado a* a result thereof. Reference Is mad* to ' Appendix I hereof for a correct statement of Shemin's relative position. It is enough horo to stats that a true analyst* of this sates data confirms completely tho fact that in aotual sates Sborwln followed its price quotation policy berelaebov* described. In tbe foregoing paragraphs we have refern-d only to National -nil Eagle boesuto these two used lb* agenoy plan almost aidslvoly for the 1933-1044 period, but aotuatly all respondent* other ; ", . i than Shsnrln used aa agency or consignment method of sailing. Shsr- : > win has only one doalor class (CX 662E-V). Beginning abcut 1932 1 International eold 50'A to 00% of its whits lead In oil on th* consign- ' mom plan (Tr. 3636). Gllddon also used it psrtisliy for several years (Tr. 2318-2323). Does tho record show that the total rest toJJhumln's cus tomers in there shipping point attics, who have no freight cost, is lower than the total cost to oustomers of Nations! sad Eagltl being filmed notice, it is due to the quality of th 2 document O o o CO CO is less clear than tms ecr-o => <A> S' Cf. zr -*<<- If (D fr^tr -# CO "1> itf Ou ^ CL O tO -V 5=* = re 3 r* =T CD CD =3 CD 20 Doe la the pocullar ittuntlan arising through (ho agency or con signment motbod followed lo iiomo oxicnt by International nml Oliddn and to k very predominant extent by National ami Eaglo (eee Ex. Beo. Dee. par. fled, p. 31 and 32 for comparison of number of tranMetloni by thoso respondent* with their respective aRent* or dlitrtbntora and with dealer*), It I* Improper to ovnliiaia tlio altna* tton on a price bails alone. Shorwln'* dealers must Invest their own money in the outright purohaio of their stock requirements and bear coiti that agents of tho other rospondonls do not (Ex. Itce. Doe. par. 5b3, SbS, pages 23*20). Under such plan tho ninnufncturer-aeUer bears the substantial cost of the inventory carried by the agent-dealers. Tho agents pay only after tho merchandise Is sold. It Is Impossible to minutely compara Shcrwin's prices to Its dealers In these cities with the charges made by other respond ents to agents slnco tho tvo classes function vory dllTorontly. It Is clear that, despite any apparent slight price advantage Bhenrin's dealers in such cities might hava, agents of the othor respondents bad a very definite advnntngo which eliminated for them oertaln costs which Rherwln's dealers had. Further, slnco Janaary 1037 (OX GG2 ZS) Shorwln has granted no quantity dis counts wbnlorir to dealers (except on tho Pacific Coast) sail Na tional and Engle, at various subsequent periods, have grsntod - COO lb. and/or 1,1X10 lb. discounts to their respective agonts and distributors In all of the United Slates (Ex. itce. Dee. par. CcS, page 29; EX 168, OX 624 AD, OX 660). Such discounts completely overcome any advantage Shorwln'* dealers might have started with even if we Ignore the disadvantage to 8herwin's dealers duo to a difference in the way tho dealers and agent* function. In com paring the cost to Sherwln's dealers with tho ehsrge to agents of Ollddou and International, the situation Is oven moro acute bocause there Is less difference in prtea but the eame advantage, from a total eoet basic, to thoeo dealers of Ollddon and International who operate on a consignment bast*. At all points other than the shipping point cities and thoir respective environs, tbero Is also a further disadvantage arising from the fact that Shorwln'* dealers must psy freight on less than carload shipments from tho shipping point and the agents and dealers of other respondents hnvo u delivered prleo no matter what quantity Is delivered or whora they are located. In the many thousands of such locations the total cost to Ahirwin's dealers will be greeter thin that of customers of ether respondents for this reason--Irrespective of all other factors. It must be remem- 21 bored that in eleven states Slienvtn has no shipping point and In about 20 others has only one In each stato (see Appendix II). The next question is whether this difference In prioe by Bhtrwin was a mslt of "preamageaeat and understanding". The Amended Complaint and Commission'* Counsel contend In the af firmative. There Is no testimony to *uch offoct. If such a finding wero to bo made It would hava to rest sotoly on an Inferenea drawn solely from the fact thst National and Eaglo pcrmtltod such lower price quotation to contlnuo dosplto their predominance In the field and do*plto Bhorwln's Inability to reclproceto. Tho fact that 8harwln, which maintain* flfly-thrco warehouses, always ship* (Tr. 3777) to its shipping points In carload quantities at carload freight rates (which it pays), while (ho others, not having such extensive ware house facilities, must fill less than carload order* by shipping from thoir plants at tho litgher lei* than carload rates (which they pay) upporl* a contrary inferonco and Is better groundod. The differ ence In tho two freight ratee will average cuhatantlslly more than 25f per 100 lbs., which is the eloieit that Sborwld's quotations ap proach National'* and Eaglo'* quotations (see Appendix III hereof and also CX 791 D-J, CX 792 A-D). Iu setting Its price* for these shipping points Sberwtn takes Into aocount only Its carlosd freight rate* to such cities while other respondents must take Into account the lest than carload freight rates throughout largo areas. Thus Shorwln Is stale to pass tba saving along to Its customers. e. Extent of Uie of Shipping Point Syttem for L. C. L. Shipments, Commission'* Counsel conecdo that Sberwtn use* the shipping point system but urge, without showing the basis therefor, that the tsbutattons of 8horwlu's Invoices (CX 704 A-Z7 and RX 306 A-X) reveal that 01.97% of all the whtte Uad-ln-oll covered by the Invola* tabulation was sold on a basis contrary to the shipping point bools and in conformity with the delivered price basin used by Other re spondents (Com. Brief, p. 45). In reply we urge two propositions. Flret, no matter what percentages msy bo shown by these tabulations they do not, booaus* of tbo type ef selective process nsed, form any proper baste for making any determination as to what poroontage of Sherwln's white lead was sold an a delivered prleo basts and what percentage waa sold on a freight colloct baste. Seoond, the percent*gee quoted by Commission's counsel do not correctly reflect the situation even as to tho Invoices tabulated. ' j ,i . ., o o o CO CO tyfyJZM1'i vJ.ysViy',? 22 ,In an effort to establish Identity of price by eonio respondents and uniform variation* tltorofrom by others, and to esItiblUli tho differences in freight rates to particular cities from the diflforontly located-plants of respondents, llio Commission's staff ilcctdcd to obtain snob prloo and freight rule information b.v nn c.xninliiollon of a great number of invotcos of all respondents. Slxty-sovon cities located throughout tbo United States were selected. Tlds selection eras not a random one. Particular cities were selected becauso of their location relative to tone boundaries or becauso of their location relative to plants of tho various respondents or for othor reasons rotated to the price and freight rate information desired. (Tr. 887*891). The staff members wero not Interested then In who paid the freight--for all other respondents paid all tho freight no mettcr where tho shlpmoot went The special character of Shorwin's situatlon apparently was not tbsn realised. The Commission prepared and Introduced Into evidence as CX 794 A-Z7 a tabulation of informn. - lion token from 845 Invoices (white lead in containers of 100 pounds or less), during throe separate three month periods, from all (CX 793, Tr. 887) of 8hsrwln's ton district offices to various destinations ,,whleh were selected by the Commission's (nvostigator (Tr. 887-891). The staff mombera did not tabulate all Invotcea of lead for tho periods uaod. The excess not tabulated ranged from 33-1/354 to ' 1094 (Tr. 888-889). In the Cleveland area tho percentage not used .'appean to have been much greater (Tr. 887*889). Counsel for tho .Commission was not concomed with who paid tho froiglit and the C tabulation (OX 794) as rocelved in evidenoe contained no information - on thla subject (Tr. 893-894). Ae far at freight was concerned they ,' ware interested only in the applicable rate (Tr. 875,891). It la clear why the Commission's Investigator eliminated tho :83`/s94 to 1054. from the tabulation. Ha waa only trying to establish the fact of ahlpmosta from a warehouse poiat to particular cities at oertain prloee and the applicable freight rates. So, once lie bad . several involoee from one elty to another ho discarded invoices for similar. ihipmenU. If tbla happened to be a aitoatlen where the purchaser paid freight from tho shipping point llion other Invoices showing an idsntiaal situation would bo discarded. Ho attempt was . uada to determine how mash lead moved on a freight collect huts from any shipping point to any other city. Tho eeleellve process which Involved the discarding of aubstantial numbers of invoices (without regard to amount of lead included) precludes the use of the 1 tabulations at a basis for contending how uueh lead was sold on a . freight collect basis or on any other basis. Tho simple fact Is that > 1 I i ' I j j j I | j , { ; I ' I | I | I j i j ' I [ 23 this problem was not In tho minda of the Commlsslon'e staff when the tabulations wore mado. Even as to thesa invoices nlono tho percentage# stated by Counsel for the Commission nro deceptive. Hhorwln prepared and introduced into ovideneo a tabulation (RX 205 A*X) which ahowe ail Information on the aamo invoices (except 12 which were tnlieing) relative to the payment of froiglit (Tr. 3771). Thla tabulation was also supplemented by uncontradicted testimony based both upon a physical examination of tho original Invoices during the hearing and upon tho witnesses' knowledge of Shorwin's freight and shipping point policies. The examination of invoices waa directed particu larly to thoso which did not affirmatively show that the order was to bo shipped collect or show that tho tonnage of the entire order was sufficient for a car or truck load, or the relative looatton of destination to shlpptng point (Tr. 3771-3804, 3663-3858, 4113). Appendix V horoof It a tabulation of the 833 Invotees into elected groups which will be discussed. We are presently eoncorned with whether Sherwln substantially follows Its f. o. b. abtp- ping point polioy on lesa than car lot shipments. As far as less . than carload erdors are concerned there are 742 Involoee Involving ! 508,693 lbs. How many of these involve shipments to purchasers located In shipping points and suburb* and environ* thereoff First, there wero 342 shipments (217,480 lbs.) which Involved deliver!** In the same eHlos where tho respective shipments originated. (Of tide total 71 Invoice* (89,085 lba.) involved deliveries in Chicago where 8herwin has its plant. (Sco notes U, 0, U and I of Appendix V). Second, thoro wore 12 shipments (18,077 lba.) which Involved deliveries from one (hipping point to customer located In another. (As psrt of It* shipping point policy It U neossaary for 8h#rwln to supply eustomors at a shipping point with an f. o. b. prio* evsn though it it necesaary in raro coses, because of a temporary shortage, to make dellvory from another (hipping point Otherwise the lndl- ; vidusl customers would be penalised for Bberwln'a Inability to always maintain adequate stocks at all points. These shipments , were to few ae not to upeet the percenter* substantially la any ( event.) Third, there were 101 iblpmente (138,719 lba.) whteh In- > volved deliveries in tho free detivery environs of the ehlpplng polnte 1 whsro tbo ehtpmonti originated. Thue 60J4 (455) of the trunsao- i lions tabulated and 7394 (372,276 lbs.) of the poundage Involved do- ; liveries In connection with whteh no freight would hnve been Incurred ? by the purchasers undor eny sales plan. The lead bad previously , j been shipped by Bhsrwln to its warehouses ar.d stored awaiting ultl* i ti i o o o c*> i <S-9'-Ct?o 2Orr ST -- 3 -- <Q TV g Z!*^ * 5" o TV 2. S. rt ej " g-g: I Co 3 Z3 3 =T W 24 mats tala. Tho payment of freight by Shcrwln to such warehouse*, nsdor inch clrcumatancoa, it cortninly not umlor nllnck here. Wo cnnnot baltova that tho Commission It prepared to contend that Shorwln rauat obarga thli type of freight coat to tho Individual cuilomora who may bay tmaU amount* of lead week* and montht nfter It hna como to real in Sherwln'a wnrohouaet So, In determining tho extent to which Shorwln baa, or haa not, followed lt pricing plan as nbovo outlined thoto tranaaotlona aliould bo oxeludod. , .... Thoro may bo aomo quoatlon at to why aueh a largo perconlngo i, . of Shorwln't bualneaa arise* from local dellvorlea In shipping point `' oltlea and tbotr onvlrona. First, It Is porfoctly normal for Shorwln -to locate its wareUouaoa In thoso cities whon it ha* tho heaviest demand for Ha products. Second, tho soloetton of approximately 63 cities to bo lneladod in tho tabulation was dellborntcly nindo by tho Commission' staff so ai to Include 33 of Shorwln'a S3 shipping points. This ratio was greatly out of lino. Thoro wore not enough non-shipping point cittos In tho selection to form any basis for V,;1. determining what peroentago of Sherwln'a business was local shlpping point business and wbat percentage involved payment of frolglit ''/.by Shorwln or anyono else. This particular problem was not eonsldered when tbo selection of eltlos was made. It Is possible that Counsel for the Commission may attach the /.I principle of free dollvery In tbo suburb* and anvlron* of shipping t;:/: point ettlea by eontandlng it 1* Improperly extended boyomt tbo nor. (Vv'.mal scope of saeb prlnotplo. Throe shoot* of tho tabulation (RX \.."206F, J and K) Include 40 of tho total 101 tranaaotlona of this class h and 115,643 Ibt. of tbo total 130,710 Iba. We find that 2 shipments, /. totalling 20,100 Ibs^ wont from Hewark, N. J, to tho Bronx In //New York Cityi that 20 ahlpmenta, totalling 00,208 lb*., went from /' . ' Oakland to San Francisco j that 12 iblpments, totalling 28, 750 lbs., / ./ want from Oakland to Alameda and that 8 shipments, totalling 2,070 .i-./lbfc, wsnt from Oakland to Berkeloy. (See Notes J and K of Ap- pondlx V horoof). It 1* porfoctly obvlon* that thoso four dostinatlona (where 83J0 of tbo load In this group went) aro well within i .:tbo metropolitan areas of the respective shipping point*. Delivery / vat xueh points, and the other pointa dlsolosod, la ontlroly justified !/ oa part of tbo ablpplng point system and does not constitute an '/1 Impropor extension tboroof. i.'?`*-'Tb* remaining Invoices, tboroforo, aotually Involvo 287 transae- V tlona and 154,404 lbs. upon wbtoli Ihoro coutd bo any question n s to ' wbotbor Sherwin followed Ua shipping point policy by requiring / /ths.purohaser to pay freight from shipping point to destination. I i l I )I i i * i i 23 Tho record shows, by tho niicontradlcted tostlmony of witnosao* who oxnmlued tho tnbulnllous and the original Invoices during their testi mony, that 211 shipments involved payment of freight from tbo re spective shipping points to destinations. Those transactions amounted to 70Jt> of Iho number and accounted for ipproxlmatoty ono-third of tho total remaining poundage. (Tr. 37714804, 3830* 3850, 4103-4117). Into what groups do tho remaining 70 transactions follt Wo Imvo heretofore ind'ented thoro nro certain oxcopllons to tho f. o. b. shipping point systom for lost tlusn car load orders. One typo of oxeeptlon, to which roforonco has boon made previously, Involves froo dolivory at six elites which do not serve as shipping pointa for othor ellloa (Tr. 37384739). This exoopllon Is of no moment as tho tabulation (CX 794) shows only 8 shipments of lead pigments to four of such cities during the nlue months tnvolvad which ware doltvored froo of frolght for this reason alone. Ths amount totaled 3130 lbs. (sco Appendix V horoof). Another typo of oxeeptlon involvo* freo dolivory to transportation companies (railroads and steamship linos) at tho nearest point ou tho purchaser'* lino. Thoro woro no shipments during tho tdno month period whor* this typo of exooption wns applied. Thoro woro sovoral shipments to rail-' roads but In all ease* the delivery point on tb* purchaser's line was a shipping point, so actually no oxoopUon was Involved. ' Tho third type of oxcoptlon Involves froo dolivory on aalts to fedora!, stnto and municipal govornmonl* and tho respective agencies thoroof for tho roason that such agenetos will not pnrebaso on any. other basis limn a doltvored prloo basis (Tr. 87404747, 38414842).' There were only 27 transactions of this typo Involving 48,834 Iba.' (see Appendix V horoof). Tho fourth typo of oxccplton arises whon the oompotlltvo situ-' allou 1* such that Hhorwln must relax its regular system of charging freight from shipping point to destination on leas than earload orders If it Is to hold Its old aoonunts or scour* now ones. We do. not want any nilsundorstaiidlng* to artso at this point. Wo aro not'; now eonstdurlng tho "mooting competition'' dofonso under Boo. 2 (b) of tbo Clayton Act. Wo are now ooneornod solely with the question' of tho oxtont to which Bhorwlu's pricing system Is the aomo as Utah of tbo othor raspondonts and wbothor tbo oxtont to which such ldsn-j tlty doos oxtst Is a suUclont basis for a finding that tho two tyitom*' aro both operated as a roanlt of tn agreement. Wo aro discussing 23 j Individual tranaaotlona and not a genoral policy of "mooting eom-] petition'' at all points at all eost. With rospoot to tho first tlx (RX: O o o CO CO W.4-.WAN I I I r (* * '.1 '< \> *.11-4* y''Vt cM J I 28 206 B, ft D * E--Appendix V) tho record how that throo (CX 791 E /_Inv. 130C0, CX 791F--Inv, 2091 and 1091) Involved 13,000 poundi ; j oold to on# purchaser on th# basla of "Special Bid Quotation for Gov- id eminent Project" and for that roaaon, If for no other, a departure - from 8h#rwm'e ninal and naroal pricing tnothodi le juetlfled. Tho '* (other thro# Involved a total of leaa than 100 pound* (CX 791 D--Inv. 4600i CX 791 F--Inv. 037 and CX 791 O--Inv. 660). '>.What doe* tho record *how aa to tho remaining 10 (ltX 203 F ' and O| Appendix V hereof) t There wore 6 *htpment* (5,102'/i lb*.) -'.from Newark, N. J. to Henry R. Bollinger who o|>oratc* y.atorea at Cornwall-on-Hudson, Poughkeepil* and Newburgh, };; Now; York. Paring tho tame period ho purcha*cd throo ear; load order* (BX206F). Tliero wore five htpmont* (1,806 lb*.) from .. Newark, N. J, and Syracuse, N. Y., to O. P. Barney who operate* v atom at Watertown and Pine Camp, N. Y. During the **me period be pnrehaaed four carload order* (EX 2U6F). Thera wore four *hlp> : ment* (1,119 lb*.) from Newark, N. J, to Polton Hdw. Co. at Middle1 i-town,N. Y. There va* one ahipment (6 lb*.) from Syracuse to .'/ 'Mohawk Wallpaper b Paint Co. at Utlea, N. Y. It 1* to bo noted ./'.that In three of the foregoing InaUneea (Pelton) the Ubulatlon (RX yV>203O) reveal* that th* frolgbt wa* paid booanae th* ahlpmanU Inv'twolved more than 200 lb*, each. In th* Barney tranaaetion* only l.'/ono-half of the freight wa* allowed (BX 205F). The eoncouion* f, ' .varied with the enitomer Involved. : -- The Dlvtilonal Sat** Manager for the Newark, N. J, dlvlilon y.^examined thews alxtoen Invoice* and than teitlfiod that the general freight policy on leu than carload abipmenU wa* f. o. b. ihlpplng /.'-.point;(Tr. 4103,1113)t that he wa* peroonally familiar with all of thee# aeeonnt*, and that all of tboae Initanco* wboro Sherwln paid aomo part or all of tho freight ropreaenUd oxcoptlon* neeoaaltatcd ,.v by th* keen competitive condition* existing at Middletown, Newburgh, -V1 Watertown and Poughkeepale, N. Y., brought about by tho alo of I;'*National'* and Eaglo'a brand* of white load by dealer* in tho** cillo* yy' (Tr. 4103-1113). Ho alio *Ut*d there war* a number of ettle* where jtt!; Sherwln ha* aooonnt* and alt tho other respondent* bavo account* ;-.y In which Bherwln doe* not havo to devlato from its general frolgbt * /.policy in order to oonttnuo *otUng and "Wo only delivered that whoro i. w# were foroed to make ImporUnl aoeounU competitive, particularly & I In tho Urger center*," and that th* number In which the conooulon U' ; would hare to he made would be very amall aa compared to lho* 'V where It would not havo to bo made (Tr. 4117), ,l Certainly th* ahowing mad* aa to theu 16 tranaaotlona, 1* *uf- pm*:*' 'JUvvi'':ji.fKie\UA<n..t'-to a*tahllih beyond all donht that anoh traniaotlona war* enftvr.** " 27 exception* lo 0 gonoral policy which were made nocouary by ooaspe* lltlon and that even thor. Sherwln did not give np fore than naooaaniy to retain tho bui'.mm, Tbl* I* well demonatrawd by thoaa transaction* where only one-half of tho freight wa* allowed. Tho next group dooa not Involve an exception. Thou Invetoe* ahould bo added to tho group of 211 Irauaaellona wboro th* per- cluuor paid freight. We liavo heretofore referrod to the faot that In raro cno n htpmonl may not go from the nearest ahlpplng point bccnuo of lack of took (Tr. 3759, 3699-3700), In ouch ea*ei the freight la adjualcd and oqunllrod bolwocn tho point* involved with tho cuatomer paying only the difference (Tr. 3760, 3838-3840) but never more than tlut If th* ahipment came from hi* normal shipping point (Tr. 3707-3768,3839). The principle la perfectly lllastraad by two ihtpmonta from Atlanta, Georgia to Atbon* and Huntaville, Ala bama. Theeo eltiea nro normally terved by tb* Naahvlllo, Tenaoaao, worohouio, but tho ahlpmonta from Atlanta carriod tb* frolgbt ehargo aa If ahlpinont woro mad* from Naahvllle. Thla policy U nooaaaary in order to prevont the cuilomer from being penalliod on theta occasion* when Ida normal ahlpplng point eannot ahlp (Tr. 3700). It 1* of no momont bore aa there wore only fivt Inatanaoa Involving only 3,130 ,he. (ace Appendix V). Tin- la*t group conalata of fourteen transaction* (6,663 lba.) for wliloh no ndoqua'o oxplnuntlon wa* readily available aa to why 8herwin paid t o freight coat Tlioy amount to lo** than 2% of the num ber and 174 of the volume and, therefore are of ng ilguMSoano*. The not re*utt la that bherwln'* (t) payment of all freight on government purchase*, (2) payment of aU freight on ahlpmonU to nix citli-* which nro aohl on a f. 0. b. baala, and (3) payment of aoma, ur all, freight In *i>eetal end individual ease* In ordor to moot speelfia eom|>otitIvc aituntlon*, together with the fourteen unexplained tranaactioua, conalttuto oxceptlon* to Ite gonoral policy of requiring the purclmxor to pny frolgbt on lo>* than car load from ahlpplng point to destination. Thoao amount to only s*v*nty-ona tranaaotlona-- lee* limn 102b of tho total. Thl* general polloy, a* operated, U *0 anbalanUally different from th* delivered price eyitun of other reapondenU aa to oonstltnte It a itparaU and distinct system. There U no widen0* that thl* *yiUm wa* set np for th* pnrpcee of providing Bherwln with a mbrUntial counterpart Vo tb* ton* eystem tlno* th* unoontradlcted Uetlmncy ehow* It ha* been wed by Eherwin la iUpreuat font for twenty-five year*. (Tr. 1312,1316-1317,3695.) J 1 O o o Iw I CO . .v-'tvvv^asKssiWjvma * CD I CCOA : CD ` ; f, fCcg Products o n Pacific Coast. j , Sherwin'e keg product sales on the Paclfio Coast are oxtromoly i Uiulted. In 1941 only 318 tom of whlto lend In oil was sold l>y Slier- ! win In this *roa (Tr. 4207). Shipments In tho eight Pacific Const I , v!- states appear to bo handled differently from thoso elsewhere. Com1 mission's Exhibit 782D indicates that llioro are sevornl cities in each i ,`V-: -of those states, in addition to those previously identified ns being ' shipping points or ns being within tho normal froo dolivory aroa * ; . thereof, to which deliveries may be made on an f. o. b. basis but there ' '' is no Indication that they also servo as shipping points. However, :even If they should sorvo as shipping points, shipments to nil other i . . cities in such statos would bo handled on the same basis as nhipmcuU I ' from othor shipping points and purchasers would pay tho freight . .` ' cost tborefrom to destination (Tr, 38C2). Eight uro in Montana, three are in Washington and Idaho each, two aro in Arixona and v-' Utah each, ono is in Nevada and tkore aro several in California m.;.'' (OX 782D). A number of thoso In California are obviously within , the rospectlvo free dolivory aroas of tho Oakland and Los Angolas i - .>'> warehouses. In thoso various cities 8korwtn appears to liavo made ; flat increases over the San Francisco price and then addod freight _ on shlpmonts to all points except those named. ' In the findings proposed by Sliorwin a complete analysis was. . ,`V'. made of Sherwln's prloo announcements for tho Paolflo Coast aroa jh;-'; and of actual prices obtalnod In wbllo load-in-oll transactions there. Such analysis (Sher. Proposed Findings--lino 22, page 15 through V"' line 19, page 17) Is Incorporated heroin by roferonco to tho aaiua ' ' extent s j if fully sot out hereet This analysis fully and completely .. supports our contention that Shervrin's Pacifio Coast business is . not eoadcoted on a pattern which conforms to the one alleged in Paragraph Eight of Count X. There appears to bo a slight inodiil. cation of the pattorn used by Shorwln throughout the ramainder -of tho United Statos but it Is not the same as the tone delivered price system used by other respondents and does not produce prices which vV i oorrospond to the prices obtained by others or to the differentials r 'V alleged In said Paragraph Eight. ~ I '>.'/) M ;o x Oarload shlpmenta of keg products--T. 0. B. destination. ; i * When a customer's ordor amounts to a carload or truck load then Shorwln ships from its factory in Chicago and pays tho freight a'/-\ 3707-3709, 3740, 3756, 3840-3841), but thoso shipments amount o,'-/-,, to only 10JC of the total tabulated. An examination of tho 91 in- 29 voices wheroin Shcrwiit paid the freight (0 destination boeauso the 1 order was for a carload or truckload shows that Ihs total amount of white load Involved wns 102,282 lbs. (51 tons), which is equal to leas than three octunl carloads. The largest amount iu any ono invoice I was 4,800 pounds. What nctually hap|>ouod in theso'Oi Instances is that tho purchasor ordered n curload of |>aint products from Sharwin and tiio load plgmonts included In tho ordor amountod to a relatively small proportion thorcof. These 91 invoices Involvo only 80 separate shlpmonts, boeauso in 11 lustancoa two or rnoro Lnvoloos wors In! eluded in one shipment. (Soo Appendix V and Appendix VI hereto.) This f. 0. b. policy is entirely consistent with Shorwin's baslo i |>oUcy of selling loss than car lot orders f. o. b. warehouse points. In arriving at tho prico applicable at a warehouse point Shsrwin i has tnkon into ni*connt tho cost of dcllvory to its warehouses In carload lots, since thnt is tho wny shipments nro always made thereto ! (Tr. 3777). TI10 carload rates from Chicago to any particular 1 shipping point and to tho othor cities normally sorviood by such ' point do not vary in any wido range. In ordor to illustrate how small n factor freight really is when all shlpmonts are made in carload lots, ! >vo liavo mado a tabulation of tho carload freight rates to all of Uia I cities which appear on Commission'* Exhibit 701 BCD and whloh I are located in tho area comprising the so-callod par tone, Irrespective of whutlicr tlioy aro shipping points or not. The average carload ] rate from Chicago to such destinations In tho ptr ton* art* it 32f por 100 lbs., tho lowest rate being 20f and tbs highest 42f per 100 lbs. (Appendix IV lieruto). In support of our statement that tho | rates to shipping points and other destinations within tho normal i shipping nren therefrom du not vary substantially, we call attention | to tho fact that the rata from Chicago to Now York City and to Bos ton is identical, though tho distances between the cities is quite sub stantial. Slnco cnoh shipping point serves a concentric area around it at least ono half of its trado area will havo the same frolgtat rata ; or a slightly lowor one. Bo, as far aa freight is concerned, It is ei matter of Indifference to Bhtnrln whether it pays freight on a oarload I to Ita warshouse or to other cltlee In the fame area. Obviously It j would be uneconomical to eorvice carload customers from a wareI house beenuso Nhcrwln would thon have to pay tho cost of loading the j roshipmont at tho warchouso os well as its normal warehouse costs. It Is nn entirely proper business prsctlco to eliminate tble cost by ! shipping carloads direct. No price oonoeulon U made by Bherwln en c-rload order*. Shcrwln merely pays the freight cost. It U true that othor respondent* also ship carload orders on a delivered price O o o CO CO i v. 30 bull th uat u they do on all leas (ban ear sbipmcnl* and lonio of them male* prico oonceuiont for carload*, but tbero li no ovidonco wbatavar that any of tbo otlior roipondonta and Bherwin hnvo nny agreement to do so. Tbir* la no evidence that thi lndepindint action of ' Bhtrwin in this regard rapraunta any change from its freight policy : before 1933, or ia in any way IneoaiUtant with lta bute f. o, b. ablp. ping point lyitam for leu than car lota. Tbo only prico Information for thla period In tbo record ia a prico announcement iaauod by Sber, win in 1932 rolativo to litharge and red lead in drum* but this an nouncement tinted "Criots actual freight allowed not to exceed 30) per 100 lb*. Lea* than car lot* f. o. b. rcarot warehouse" (CX 823 A). Thar* limply 1* no bull upon which the Oommlaiion can predicate an inference that Bherwin adopted in 1933 and 1934 any agreed method relative to thia freight coat It la itill doing what it ; ; waa doing all the time. ' D. Dry Product*. j *`Di7 products" aro tho samo a* "keg products" hut nro packed in bag*, drum* or barrel* of 300 lb*, or COO lb*, capacity Instead of oontaiaori of 100 lb*, or lot* ns in tbo ceso of "keg product*." We bar* oxeepled to tbo Examiner'* Finding* (Ex. Hoc. Dec. pnr. 4a, p, 13-16) par. 6e9, p. 33) par. Cd, p. 37-38 and par. 7W, p. 42-13) which sustain the charge* atated in Subparagraphs 11, C, and D of Paragraph Kigbt of Count I lo Ilia ofTcct Hint, as a result of tiio alleged agreement, dry white lead, dry red load and litharge, when . .. pecked In barrel* or bag*, era sold by all respondent* on a tono bail* and that tbo prices for red lead and litharge In car lots of 20 - ' ton* or more are agreed dilTeientlati over American Smelting nnd Relining Company'* quotation for pig lead (Shor. Exe. 17, 47, 32 nnd . 63). We refer to Appendix 1 for a full atatement of tho record l but* for tach exceptions. Insofar u 8borwin U concerned tbs ' Examiner's Findings srs not supported by tbs record or by tbs citetions rslisd upon. BrisSy w* call attention to the record showing u to aach type of product. i I : : > 1. Dry While Lead. For many year* Slicrwln'a ahipments of dry white lend, irrespcc. !. tiro of *1x0 or typo of container, to customer* 1m* amounted to "practically nothing- less than 17 (of tlio Industry)" (Tr. 13311332). Sherwiu doc* riot luako or *ell sulphato (Tr. 1313). Tliero ia no evidence that Shorwln over anuouncod, even to its own eui. 31 ployco*, that it would aell dry white lead In barrel* or bag* on the TaclBo Coast at a 23f per owL added dilToreutial over a base price boforo January 28, 1942 (OX 823 Q) or has douo to subsequently. (Tr. 1323) This elnglo oxhlblt stale* "price* for the first quarter of 1942 will bo a* follows," and "wo will not accopt any contract* or open order business except u approved by this otBee." This bulletin was for use only by certain of Sberwln's employees In connection with soliciting quarterly requirement business (Tr. 1323-1328). There 1* no evidence it was ever circulated to the trade. Tbs record contains no evidence relative to a tingle sals of dry whit* lead in barrels, drams or bags by Bherwin to any customer anywhere in the Daltad State* at a differential prloe over a baa* xoaa price. Kona of ibe paint manufacturer*, who aro large user* of dry white lead for making mixed paint, included Bherwin a* ever being one of tlielr sources of supply for this product (Tr. 1333-1460). In this state of the record how can it be contended that Sbsrwin'a tingle announcement of a quarterly price for dry white lead in barrels tight years after the conspiracy waa allegedly entered Into It evideno* that Bherwin has participated in a conspiracy to sell dry whit* lead in barrels on an agreed xonc system! If thore is any burden of proof on the Commission, and wo contend tbero is, it lakes more thn this to meet it 2. Dry Rsd Lsad and Litharge la L. 0. L. lota. 3. Dry Sad Lead and Litharge In ear lots. Shorwln'a shipments of red lead and litharge, irrespective of alia or typo of container, to customers for many years bus ranged from . less than 17* of tho industry shipments of litharge to "practically nil" for dry lead (Tr. 1332). Bherwin doe* not wall these produat* on tho 1'aclfla Coast (T. 1314). Bherwin dues not make or sail red lead or litharge far uso by tho battery industry which is the largest user of such products ami is not a competitor In that field (Tr. 1646, 4070, 4003). Kens of tbo battery manufacturers Included Shorwln as aver bolng qua of tbelr source* of supply (Tr. 1673-2024). Whilo Shorwln sell* these product* in ear lots (Tr. 1327), thsrs Is no evidonc* that it has suds carload shipments of rsd lead or litharge to any customer at any point at a differential abort its best price. Its officials have no Information that inch shlpmenta have been mad# (Tr. 2063-2066). There la no evideno* In the reoord that Bherwin ever hod a car lot price which farmed th* basis for its chargs* for Issssr amounts In dlffsrsnt containers. i > o ;o io ! CO i co I notice, it is due to t.ne quality of the document being filmed ____ 32 . Thera U no evidence that Sherwln granted any 5 lon <11 Mount as > retail of any agreement with any other retpomlcnt itml there . la evtdonoo that It did not do to. The Committlon contcndi that In the meeting* In 1933 the rotpondontt agrcod to put tbo provision* of Sehedulo "A" of the Code Into efTcet Irrctpeetivo of whether the Code waa ever approved and that they did to prior to the npprovnl thereof. The Codo wat approved May 24, 1934 (CX SCO). Antic!patlng thl* action National put a S lon dltcouut Into effect n few ' day* earlier (RX 159 B). 8omo of tho other rotpomlentt followed thl* action yet tho evldenco thow* that Shorwln did not do to (CX y. .832 C). According to tho record It did not grant n 5 ton discount until September 1935 nioro than a year later (CX 823 1)). If Slier,'i. win had been involved In a eontplraey to ute an agreed ditcount for . 5 ton lot* when Ita ropretenlatlvet wero attending tho 1033 moating* 1'...'why would It have waited ovor a year to do tot The Examiner hat found "Smoltlng* publlthed pricot on comv mon pig load are the Now York mnrkol pricot and nro ncceptcil by pigment producer* at n lioilt for pricing their product*'' (Ex. ltcc. ' . Doe. par. 2a, p. 11). 8herwin know* nothing about whether SmeltiV Ing It retponulble for tho Now York market price of pig lead--that . la, whethar Smelting niaket the market price or niorely haa a known i; policy of tolling at the market There U no evidence that Shorwln -.'/.ha* accepted Smelting'* pricot for pig load at a hnalt for pricing ita f., 'product*. In fact, there It uncontradictod tettlmony to the contrary ' .'1 (Tr. 1328). Shorwln price* it* dry red lead In earloti on tho Now { .' York markol quotation a* It appoart in Engineering Mining JourV-.' nal, a trade organ (Tr. 1328). Wo contend that Shorwln ha* tndi- vidaalty decldod to bate it* price* for dry red lend and lltlmrgo on :,v the market prio* of pig loud because tho production of thcao product* ;'. (* merely a convcraton process for pig lead (Tr. 2383). There I* bo evidence that Shorwln did not use this system prior to 1933. < r Thor* 1* tome evldonco thnt It did bceauso Shorwln mutnlutnod tho tame dllTorontlal of $1.00 por hundred pound* between dry red lead and llthargo at loaat at early at 1932 (CX 823 A) which wnt i, prior to the dato of Iho Inception of tho alleged conspiracy. Hero .' again, Sherwlu continued doing only what It waa doing prior to the f ., 1933 mooting*. Tho Examluor'i ov'idonllary llndtng* (Ex. lice. Dec. pnr. 4a, p. 15-1G and par. ColO, p. 33-34) upon which lie hnses hit finding* cntltlod "Evidoneo of Effect*" (pnr. Gd, p. 37-38) and "Conclusion* |.';/a* to Agreomoutt" (pnr. 7t>4) do not contain n tingle refurencu tu it] Sherwln or IU prleot for lho*o product*. There It no tabulation of fl<f. ' V'\ . . I f , j I j ! I j ) j ' ' j | ; i j ; j > 33 Invoice* tuned by Bhenrtn and there It no evidence with Inference to any spedflo tale by Sherwln of theae product* In car lota or otharwite. E. Terms and Condition* of Sal*. 1. Resale price*. * Subpnragrnph A of Paragraph Nino of Count I charge* that cnch of tho rcajiondcnt*, in tolling lead pigment* to dealers for rewite, require* *uch eu*tomor* to retell aueh product* at price* and term* of nlo fixed and dolortninod hy tuch rospondont *o that each of tho retpondents Is rcs[>on!blo for the price lovolt to palnttr* nnd consumer*. Tho Exotnlnor found that tho agency or consignment method of telling waa n |ierfeet tool for tho control of tho agont'* price* by ro tation to palntor* nud othor coiuumor* and effectively aeoomplUhod that objective (CXGOl UC, 500 OK, GOl U|Tr.2933). Tho Bxamlnor*. Heoommended Doclalon acta forth In considerable detail th* motivat ing factor* which prompted the varlou* respondent* who uaod tho comignmont method to adopt It In tho first place and then later ubstantlally extend lit operation (Ex. Hoe. Dee. par Sbl through 6b5). Sherwln op|>o*rd tho consignment or ageney method of soiling and never adopted It (CX 50G K, 712 Aj Tr. 3701). Coun*el for tho Com mission so conecdo (Com. Brief, p. 43). Tho Exmnlnor also found that tho iiso of fair trade agreement* is also an effootivo method for controlling price* at tho retail level. National used fair trade agreement* for tho tale of whtto lead In oil by retailer* In at least nine of tho state* comprising It* par tono (OX 57G A-K). There la no arldtnca whatever that Sherwln avar anterad Into fair trad* contract* with dealer*. Sherwln distribute* only on* type of prteo card to It* dealer* (CX GG2, SW5, Tr. 3701). 8ueb prteo card* show mggeated pries* for whllo leml-ln-oll to eonsumors nnd painter* which the Individual dealers may or mny not use at their discretion (Tr. 3G9G, 3700-3701). No suggestions mo made to dealers with rotpeet to dry whtto lead, red lend (dry or In oil) or litharge. Thoro is no ovldoneo that Shorwln over took any action to control tho resale price of any lead pigmonl* to painter* or consumer* except In retail ttore* which it owned and apcrnled. Thoro Is no evidence that 8horwln' dealor customers ever felt undor ony compulsion to, or did, follow tho resnlo prices suggested by Hherwln or that Shorwln po*ae*od, or nttompted to exoreiso, any jwwor to onforco its uggotlon* or pollcod it* doalors for tho purposo of ascertaining th* extent to which o o o G> I 34 they complied therewith. Consequently, there i> no basis In thU record whalrrtr, 10 far ei Shcrwln U concerned, for the finding* contained In the Examtnor's Rceomniendod Dcclalon In I'nrngraph 7a9, p. 251 par. 7b4, p. 42 and par. ToO, p. 44. Coumol for the Cora, ralaalondld not aek for an order against Shorwln on tide |K)lnt (Com. Propoeod Order, Section I, par. 5) and specifically exempted Shcrwln therefrom. Undoubtedly, the use of the consignment or agency plan and ' the nsa of fatr trade contracts by various of the respondents, acting 'individually, caused those sellers' respective agents and customers to ; comply, In largo measure, with tho manufacturers' desires concerning - the retail price Jovol for euch lead pigments but thoro Is no ovl* donee whatever that Shcrwln'e dealers were similarly tnitu. enoed. As a matter of fact, Shcnrin Is primarily Interested in the sale of ready raised paint which Is highly competitive with while lsad-ln-oll (Tr. 33434344). The Inoroescd nse of reedy mixed paint in the last twenty-ftro yoari lias been largely respon sible for the deerease in the demand for white load-ln-oil. Slierwin's doslors ere also primarily Interested In the eels of ready mixed paints because their heavy voluma of aalot lies In that field. For that reason nolther Sberwln nor Its dealers are Interested In resale price maintenance for white lcad-ln-oll, which Is carried la stock by Sberwin's dealers primarily so that they will bo In n position to supply the product upon request. In the event they can, not sell ready mixed paint to the particular customer. In view of p this situation, it la little short of fantastic to conclude thst Shcrwln, ; or its dealers, hare sufficient interest In the maintenance of rosalo , prices for whit# lead-io-oll for Bborwln to become a party to nn agreement or understanding or common course of action which bat . such result as its objective. 2. Container differential!. : On August 8, 1033, the Dry Produets Committee or UA tontc uvely approved for Inclusion In the N. R. A. Code a provision so , tlng np a differential on red load and litharge of 504 per ICO Ibi over barrel prices for 100 lb. kegsj a differential of 754 for 50 II , kegtt and a differential of *1.00 for 25 lb. kegs In talcs to cartel pnrchaaeri (CX 800 0). So far as wo can ascertain thor ' '<> further diKu.slon of those provision* and they wero not ir . eluded In the Codo as finally adopted and approvod (CX 80S). A :;Iaaxt rises yaauaiy 9, WSJ, whleh vu prior to the first Cods meet . lags, Bherwln quoted a price differential of 254 per 100 lbs. when a I i I 35 lead plgmenta are packaged either In 60 lb. or 25 lb. pells Instead of 100 lb. kegs and a differential of 504 per 100 lbs. when paeks4red la ! lT/j lb. palls (OX 582-W). Thus, wo find that Bherwln wns following the baslo prncltoo \ of clmrglng nn mldttlounl price per 100 lli*. for red lend nnd litharge a ml tho other lend pigments when they were packaged In containers of less than 100 lhs. enpnclty tong licforo tho first dtscusston reflected In tho Committee minutes of August 8, 1933. In view of this fact nnd In vlow of tho further fact that thero Is an actual dlfferonoo in the coat of such containers, which la approximately the taint at the differential charged (UX 210, Tr. 38824885), we contend there U no warrant whntovor for drawing any adverse Inforenee from tho moro fnct thnt Bherwln continued to chnrgu thoao snmo dlffercutlale nftcr tho mooting in August 1933. Tho record simply allows that Shorwln lias pursued tho same course of conduct both before the mooting nnd Ihoronftor. In fact, It wns not until moro than two yoars Inter, to-wlti Jnnunry 4, 1037, that Shorwln mode any dls* tlnetlon between tho 50 lb. and the 25 lb. containers (OX CC2 AB, I EE). Does tho Commission propose to Infer that this aetlon by Shorwln In 1937 was predicated upon n discussion and agreement more then two years earlier In point of llmo when there le nothing inorof That Is the situation her*. 3. Quarterly contract*. Tho Examiner lias found that Shcrwln entered into quarterly contract* for oxide* nnd In sopport thereof cite* CX 823 A-fl (Ex. Itcc. Dec. par. Go, p. 33). Shorwln excepted to this finding on th* basil that It Is outlroly unsupported by the exhibits relied upon and Is contrary to the only ovtdonco on tho aubjeel (Bher. Exe. 47). The record dote show that Bherwln had quarterly ooutracts for dry whit* lead bnt not for oxides (Tr. 1320). Thors Is no evtdeno* as to the basis upon which Bherwln negotiates such quarterly contracts other than CX 823 G and there U no Indication that tho price* thero quoted hail any relationship to Smelting's prleo for ptg lead. It will bo noted that spocifle prices for both carload and less than car load orders aro quoted for a quarter of a year to Bberwin'a repre sentatives who mut submit contracts vbtalned in conneotlon there with to tho homo office for tlnal approval. There Is no testimony con cerning the terms nnd conditions of any of auoh ooStradtS to no In ference thnt they aro Identical with or substantially almllar to thoe* of the other respondents I* warranted. Tho Examiner found that no uniform ealoe oontraot waa agreed upon or need generally (Ex. Boo. > Dee. par. 6e, p. 35). o o o CO CO I A *- cror-Qd 3o To' 3' e. - <-3*<5<g-S ? w-' 2- ia i--t m ?P OQ CwL e~<9 <ctr P oc O + ^^ 3 <d r? =r <9 <o 38 I 4. Bad Lead quality differentials. The Examiner baa found that Shorwln, ai woll n all of the other respondent* except Intsrnatloiial, quoted and aold rod toad on tho differentials agreed on for Schodulo "A" (Ex. Roe. Deo. par. Of). Sberwin excepted to tbia finding (Shor. Exo. 49). It it truo that Schedule "A" of the Code, which novor became ofToellvo, coutninod provision reading i "(d) Bed Lead eontalnlngnlnoty-ieven per cent (9791) .or ninety-eight per cent (OSJt) rb.O, aliall be ao marked on the pachego and limit be aold at not leu than ono-<|unrter cent (Vif) and one-half cent (Vii) per pound, respectively, over Seller'a price for grade* of lower Pb.O. content" (Cx 809). | j j L I I j Thors la ao evidonco that Shcrwin adopted tho policy of Ijiiotlng thoae throe gradca of red lend at different prices prior to Janu ary 14,1943 (CX 623 F>, and there la no erldcnco it was done then as a result of any agreemont or understanding with any other re spondent. The rocord contains threo simitar bulletins which wero issued by Shorwln subsequent to tho dato of tho approval of the Code in May 1934 and nous of them quoted rod lead in threo different qualities (CX 823 C-E). It is obvious, Ihoroforo, that as Into ns . the last of theso, Decomber 21, 193d, Shcrwin had not adopted tho practice of selling threo different grades of red lead at differential , prices. As far as the record discloses this was first done in 1942, , but in any ovont It was first dono somottmo subsequent to Dccomber 21,193d. 8horwin mado a study as to the cost of making tho tlirco grades of rod lead and it was found that Ibo respectI vo differentials : quoted by Sberwin for 97ft and 985k rod load wore slightly less In , eaeb case than Use additional cost of produelng such grades over tho '..float of produelng 9351 rod lead (BX 209, Tr. 3881). Tim Examiner sustained Shorwin't contention in this regard (Ex. lloc. Dec. nor. 9e, p. ill). Docs the Commission propose to infor that this action hr Sharwin subsequent to December 1930 was predicated upon a ills- eussion more than two years earlior in point of time when there Is nothing morel That Is tho situation hero. i T. Agtnoy or Consignment Plan. It ts charged that ono of tho precltcos adopted ne n result of tho atlogod conspiracy was tho use of a plan of soiling widto lead ; through dealers who are appointed as agents and who soil from consigned stocks. (Item 8, Subparagraph B, Paragraph floven, Count I}.- Shcrwin's representative wae presont when tho use of 37 such plan by some of tho respondents was discussed during tbs N. If. A. period mootings (CX 801 A-D, 005 AB, 800 A-O), but was openly opposed to tho plan (CX 600 E, 712 A) and Shorwln nover adopted or used tho plan In any form (Tr. 8701). Tho Examiner so found (Ex. Boo. Doc. par. 6to, p. 23, par. 7a5, p, 39) and Commlsnlou V Counsol so concede (Com. Proposed Ordor, Par. I, Item 6, Com. Brief, p. 48). Therefore, tbs chugs set forth in Item 6, Sub paragraph B of Paragraph Berea esmnot be sustained as to Shanria. 0. Bhsrwtn'* Position In the Bead Pigments Industry. In eomo casos the Commission has been able to establish a meeting of tho minds among a group of respondents by proving the exWtcnco of an actual agreoment by direct uvidonc#, buHn this easo it ts absent. In such ovent tho Commission's only alternative if to establish facts from which the mooting of th* mtmle and the agree ment may bo inforred. In doing so the Commission must appraise each respondent's Inccntivo by evaluating the advantages surren dered by each respondent for the common bouofil of all. First, what is Bhenria'e position in the industry from the standpoint of alas? Bo far as tho lead pigments Industry Is con cerned Shorw'n Is, by for, the smallest unit As previously slated. Its pcrcontnge of wbito lead-in-oil will not exceed 854 to 054 of tho total Industry shipments and its shipments of alt olhor products tnvutved boro are 195, or toss, of tho Industry shipments. Many witness's from the primary oUasea of purchasers of dry white lead, dry red lead and litbuge testified and not a tingle one identified Bhsrwtn as aver being one of lta sources of supply for these products. Further, BUorwtn'a participation In tho load p'gmont business It largaty restricted to small orders. Of the 845 white lead-in-oil Invideos lehutntcd by the Commission's staff, only 78 involved orders for 1000 to 2000 pounds of load i onty 83 Involved orders for from 2000 iwunds to 4000 pound* j only U involved orders for from 4000 pounds to G000 poundtt only 0 Involved orders for from 8000 to 10,000 pounds and only it Involved orderi for at much as 8 tons and only 3 of thoso were for more than 6 toas (one for 18,000 pounds, ono for 20,000 pounds, and ono for 28,000 pounds). (See Appondix VII.) Rhorwtn it admlttodly one of tho largest, If not the largest, ready mixed paint manufacturer in the United Btatos. Ita promo tional effort* are directed exclusively to the sale of ready mtxed paints. Tha rocord Is repteto with testimony to the sffeot that ready mixed paints nro highly competitive with the lead pig- . a o o co co 5 >'. 38 j racnts Involved In this proceeding, particularly whllo lcntl-ln-oll S usd red laad-ln-oll, and that tho Increased uo of rondy mixed piitnt* In tho last twenty-flvo yoor ha* been largely responsible for tho dol | crease In tho domand for whlto lend and red load at tho imlnter ntid ; container levels, The major portion of Sherwln' production of load | plgmenta U used In manufacturing Its own mixed paints. Bherwin \ la rally a negligible factor In the lead pigment Industry. t - Second, what waa Bherwin's relation to the other respondents In , 1933-1934? The record shows that during tho 1933-1934 period, tho | Code for the paint, vamlib and lacquer Industry, also waa being drafted. That Industry, of which 81serwin Is n lending member, was | using every effort to bring tho lead pigments Industry under the '! paint code. Tbe lead pigments Industry resisted this effort and suc } cessfclly prevented Its ineinston under the paint Code (CX 703 A-D, " 706 A-F). It is obvious, therefore, that Sherwin's primary Interest i lay with the paint Industry and not tbe load pigments industry. See / also EX 201-204 for an Intorestlng exposi of Natlonal'a attitude i ; towards Sberwtn In 1942 wldeh ts not compatible with tho attitude ; generally found among eo-eonsplrators, i A' Counsel for tho Commission havo well put It "As a largo mams% faetnrer and sollor of mixed paints, It (Sherwln) was opposed to i .oonalgnment selling and novor did adopt this phnso of tho eousptri soy'*(Com. Brief p. 43). Tho same reasoning la applicable to tho | other phasee of the alleged conspiracy. Sherwln is n very tin 's portent member of the paint industry aud a very unimportant mom- r. bar.of the lead pigments Industry in which it has no substantial 1 ( and no real Interest. If tbe membert of an Induetry, such as tho lead 3" plgmenta industry, should propoee to enter Into any agreement to ? control and dictate tbe prices and terms and conditions of solo for 1 their products thoy eertalnly would not hnvo any deslro to Include, or fool any neoeaalty for tnolndlng, a member of tho Industry who | (I) waa a very small and negligible factor in such Industry and who If, (2) was a vary Urge producer and seller of eompetltlvo products % whleh would not be Included within the scope of tho agreement. * There eouldbe an Inoentive for ao doing only if tho other memticr of j the Industry was in a position to obstruet tho full operation of such < Sherwln was certainly not In such position In nn industry of i wrlxiah It xu In fact a vory minor factor and with which it was In 3 .rnbetanUal competition as to Its major sales efforts. The only other j poeeibU Incentive would ariso from the fact that Sherwin's plant 3 location was such as to Impede the full operation of tho plan. We $ will dsaoostmU conclusively that It was not In such potlUop. so Assuming thoro waa nn ngroomont on tho part of some of thi respondents, which wo deny, there was no Incentive from a pUol loca tion standpoint, for Including Bherwin. During tho porlod from 1930 lo 1941, National produced ap- 9 proximately 00% of tho basic enrbonnto of whito lead In oil sold on tho market, from 3054 lo 3354 of tho dry white lead, batle carbonate, sold on tho nmrkot (Tr. 1047,1CC5-G0) Com. Ex. 064). The combined total percentage of dry whlto lend, baste carbonate, and basic earbonato of whlto lead In oil aold on tlio market for this respondent was 5f.r7' In 1938 and 53% in 1941 (Coro. Ex. 069). However, tho Amended Complaint doflnes white lead as including both baste carbonate of lead and basic sulphate of lead. Eagle 1' the largest producer of basic sulphate of load and National producei U in relatively small quantities. Therefore, In determining Na tional's overall position In the whlto lead market aeeonnt must b< takon of tho production of bnsto sulphato. Based upon tho flguroi in the record National's overall pereeutago of whits lead production Including both basto carbonate and baslo sulphato, represents ap proxlmatoly 30% of the production of eueh products. During tho samo porlod National's production of rod lead ant Ulhargo amounted to approximately 30% of tho total production ol such products by manufacturers for resale. In arriving at this per centage tho production of such products by battery manufacturer! for their own use is not taken into aeeonnt (Tr. 1640-1647, 1663 1666). Ita white lead plants are located In Perth Amboy, Nex Jorseyt Philadelphia, Pennsylvania) Chicago, Ultaola (where it pro duoct 40% of Us whits lead), St louts, Missourii and Oakland California (Tr. 1071-1072). It produoos red lead and Uthargi In nine plnnls located In Brooklyn, New York) Philadelphia, Penn sylvanlai Charleston, West Virginia] St Lonlt, Missouri) Chicago Illinois; Dallas. Tsxaif Atlanta, Georgia and Los Angeles and Sai Francisco, California (Tr. 1623). For the period from 1930-1946 F-sglo producod (exeloslve of lb sulphate production) from 13% to 20% of the white lead In oil aw approximately 10% of tho baslo carbonate dry white lead (Tr. 1560 1061). In addition, this respondent produced and sold substantia quantities of bnsle sulphato of load (Tr. 3337, 4129). During tb porlod from 1937 to 1044, Eagle-Piebor prodnoed and sold tbs foUow ing quantltlea of haste carbonate of lead and baslo snlphsts ol jew respectively (Tr. 4129) i 9 o o o CO CO Il t -.iJST'AHtaSi rr .o n> c: o 5' P ?. (O 2rr: m : P =.* c CP Ou r+ zr CO c c- a> a. O. cCD OO r+ ez o 3 cp =9 zr <p c i v< *! : ' - Year SALES TONNAOES. Basle \Yblto Lead Baths While Carbon*to Lead Sulphate 1037 ..................... . . 1938 ..................... V '-> 1939 ..................... 1940 ..................... 1941 ..................... : , 1942 ..................... i 1943 ..................... 1944 ..................... 7,348 5,955 6,315 4,1186 8,tX5G 6,820 3,889 4,342 5} Eaglo-Pieher produced baste carbonate of white lead at It* plnnt In Cincinnati, Ohio (rcconlly dlimanllod), and Ita oxldoa, red load and litharge, at plant! located la Joplin, Missouri, and Nowark, Now Jersey (Tr. 1562, 1664). In addition, It manufactured blue lend and haalo white lead aulphate at Ita planta In Galon*, Knnaaa, Hill"boro, IlHnoU and Joplni, Mlaaonri (Tr. 3386, et aoq, 3421, 3600). Thna, Eaglo-Picher had throe planta manufacturing haalc wliito lead anlpbato, leaded tine oxide and bine lead, two planta nm*ufae taring oxldoa, and ono plant manufactaring bnaie earbonato of wliito load (Ohicago baa now boon aubatituted for Cincinnati aa tho point of tnannfactore of baate carbonate). ; In 1943 Oliddon produced between 8% and 9% of the white lend in'oil and approximately 13% to 18% of tlio dry wbito lead (Tr. 1307. 1306). It produce* red lead and litharge at Hammond, Indlnnn, which 5 la in the Chicago, awitchtng area and produce* white load at Scrnnton, PennayhrnnU (Tr. 1230-1233). In' the period from 1037-1043 International aold from 3% to'4% of the white lead In oil and from 10% to 10% of the dry white lead- (OX 741, 822-J). International dlaconttnued production and aalt of whit* load and on Oetobor 1, 1046 aold ita plant at Vlnat Chicago, Indiana, which la within tho Chicago awltahlng area, to jL Eagle no that Eagle now alao ha* a plant located In the Chicago 3T area for the produetlon of while lead. " Obviously the location of inch plant* at ahova detcribed reault* In.tome'of th# reapondenta having a territory aurrounding their mpceUv* planta whero tliey have an advantage, due to freight rate*, orar other prodneer* loo*led elaewfatre. The alec of the area of ad- vantaga varUe with the dlatanee to the tocatlon of the neareat plant operated by a oompetltltor. The Commlaalon contend* that all of * * tho reapondenta have given up and aurrendered Uietr retpeotlve arena of advantage In return for a mutual aurrender of advantage hy cucli other uml proixmo* to Issue an enter which will require, la clfcct, cucli rvajiomleiit to rotiro to Ita own freight advantage terri tory and aotl there alone. National1* Oakland, Saint Louli and Phila delphia planta have a freight advantage in a major portion of tho United Stutea over atiy other white lead plant operated by a re al londviil horclti. Nnlloual lina a white lead plant In the Now York City area and therefore bu a freight advan tage in New England ami the Inwur jiortlon of New York Stale ovor any other planta. Knglu'a Cincinnati white lead plant had a freight ndviintngo over any other wliito lead plant in a anbatantial area wlillo la operation. Due to the recent abandonment of that plant tho major portion of that territory will be controlled by either St. Loula or Philadelphia with until portion* going to Chicago and Scranton. Oliddon'* whito lead plant In Scranton, Penuaylvanla, hna a frolght advantage over any otlier whit* lead plant in th* major portion* of Pennsylvania and Now York. National, Intarnatlonal'a plant (now owned by Ragle) and Sberwln all have tb* tame freight mlvnntngo* in n relatively small and lightly populated aroa snrrounding Chicago. Th net ratolt t* that OUddea, National and Eagle have a freight advantage in variou* Urritoriea, but Shtrwin has no advantage In any territory. Thl* It due to the feet that National and Eagto (atneo It* ncquUltlon of International'* plant) both hive white lead plant* In Chicago whero 8horwln'* tole plant i* located and also linvo planta olsowbore. In a largo portion of the Unltod Slate* National has a freight ndvnntngo over rod load and litharge plant* of all competitors dna to the fact that It ojwmtcs nine red lead and litharge planta atrategicully placed throughout the whole United State*. Eagta ha* a freight " advantage in part of tho country by reason of ita plant at Joplin, Missouri. Sharwln ha* so advantage In any territory. National, Oliddon and SHorwin all bavo rod lead and litharge plant* In Chicago to thoy aharo any frolght advantage accruing to Chicago ovor St. ; Loula, Missouri)Ohnrieatou, Weet Virginia, and Oakland, California, In nil of which eltie* respondent# other than Bherwln have plant*. Bhorwtn hna only four shipping polnta (Detroit, Minneapolis, Duluth and 8loux City) In the area where Chicago has a freight advantage over other citlea In which lead pigment plant* (either ; whito toad or red lead and litharge) are located. In ihlpplag l**d : pigment* to each of It* other 48 shipping point*, or to area* aerved . r'  S sl s-- S r-^ ' 3 2,- 2. rj w a Q- = O. CD oc g03 rt- _ ' neh shipping point*, Bbsrwin litti freight disadvantage to n* at more of the other respondent*. The Identity of tho specific Irodnoer who hte the advantage over Sherwln In each auoh ilualon will vary depending upon which one ha* a plant locatod closer, clghtwiac, to inch shipping point than Shorwln'a plant at Chi* igo.'- Sherwln 1* at a disadvantage, freight*!**, to at least o> of i other respondents in the entire United State# except North and loath Dakota, Iowa, Minnesota, Wisconsin, Michigan and tha north* | m parts of Illinois, Indiana and Ohio, and even In this area It doe* a at have an advantage, frelghtwiie, over all other respondent*. It start* that area with other respondent*. % '* ; i Tt NO CnrS&KNOZ WARRAITID t h a t 8HERWIN PARTIOIPATZD IN A PLANNED COMMON COURSE OP ACTION. Wa da not propose to argue tha baslo quostlons of law arising Ildar Count I hot adopt and roly upon the brief* filed on behalf ' other mpondenti, particularly National, for an adequate proai station thereof. We do wish, however, to dltonsa one propoal* 5 onwblch applies peculiarly to Sherwln. Counsel for tha Commission have relied hoavlly upon the ease ,' *Port-Howard Paper Co., el al. v. Federal Trade Commission, 10 Pod. (2nd) 899, and have atatsd that the faeta in the two caeea mr,-a'-striking resemblance. (Com. Brief, p. 18.) We cannot rae with that statement and wa challenge lta eorreetneaa. We till, attention to ths fact that tho Circuit Court of Appeala In do* tdlng that eaae first statod tha baate proposition that '"The more _ inf .of price lists, or tha nss of pricing xonea, or tbs axlstcneo j ' anldsntical or sabstantially tlmilar price for a standard prod* iu. n t eoneluslvs evidence of an allogal conspiracy". There | uat be aomething more before an Inference of Illegality I* war* | ntod-TWe ooatend tliat Sherwin'a pricing practice*, In the main, i aso-different from those of the other respondent* that no In* | renoe of agreement Is warranted. W* contend fnrthor that tlioro { lacking, so far as Sherwln is concerned, one important olemont i)Ih luia been prteeat in all of the easea decided by the Courts hera'agreamont has bean inferred from Identity of pricing prac* | ms. i r Slhoo Novambcr, IMS, tho Circuit Court of Appeal* for tho iventh Clronlt has bad occasion to rovtow and uphold five deel* Iona' In' which the Commission had predicated Its finding* upon tfarenoea arising throogh tho tt*e of freight equalization systoms ' and xone prlco systems whoroby each manufacturer surrendered a frolght advanlago In tho territory noarest Its own plant In re turn for a corresponding surrender of freight advantage by each otlior ro*|>om!ent. In United Slatee HuUlert Atjociation, el al. v. Federal Trade Commission, 152 Fed. (2nd) 101, on order was Issued by the Com. mission (Dockot 3555) agnlust eighteen malstora who control more than 00J4 of Iho domestic markot for brewer*' malt. Eleven re* sixmtlonU liavo tholr plant* In Wisconsin, throo In Illinois | two to Now Yorkj nnd one each In Pennsylvania and Michigan. They sold malt only f. o. b. point of dcllvory. Prloo uniformity was obtained by tho uso of Chicago as a freight basing point In re. 1sorting to the Association. Upon appeal, the Circuit Court of Appeals In upholding tho Commission's order, stated! "Wo are of tho vlow that the Commleslon't (lading* that prlco fixing agreement oxlstod must be accepted. Any other conclusion would do violonco to common sense and the realities of the situation. The fact that petitioners utilised a system which enabled them to deliver malt at every point of destine* tion at oxnotly tho same price U a persuasive circumstance In itself. Especially is this so when It le considered that patl* tioner'a plnnts are located in four different states and that tha barley from which the malt Is manufactured is procured from right or nine different etatoe" (p. 164). In The ililk aud lee Cream Can Intlilute, el al, v. Federal Trade Commission, J52 Fed. (2nd) 478, an order wa* issued by the Commission (Docket 4551) against eight manufacturers who manufacture approximately 0595 of ths metal milk and !o* artam enus distributed in the United States. Two respondent* have their plnnls In Now York; two in Illinois) and one etch In Michigan, Pennsylvania, Minnesota and Wisconsin. They sold on a freight equalisation basis whereby tho delivered cost to * purehaetr wa* tho same regardless from whom Iho purchase wo* made or from which producers' point shipment wae made. Tha Commlealon found that the freight equalization plan, a* used by the** respondents, was not used on a competitive bails whsn reaching into a oompsll* tor's territory but wa* used only to match competitors* prise* (Par. 7). Duo to tlic wide diversity of location each respondent actually hnd a substantial torrttory In which it bad a freight adv*n',g*. Upon appeal, the Circuit Court of Appeals, in upholding the Com; mission's ordor, stated) 44 "... a customer located In Sb Paul could purchnso cans at . the tame delivered price lrre*i>cctivo of whother tlio purchase w mado from a tncmbor locntcil in Chicago or 8t. Paul. Just how inch an unnatural equation could bo brought about by members of an Industry without a plan or agreement dim- ' cult, if not impossible, to visualize. The mere fact that tlio .situation did oxlst in and of Itaclf furnlahva strong aupport that the lnetltnto and Ita membora woro acting coo|>orallvcly . >. and by agreement. _ ^ "On the face of the situation, it taxes onr credulity to believe, 1 /. aa argued, that petitioner* employed this ayatora without any - agreement or plan among themselves." (P. 481, 482.) In Fori Uoward Paper Company, el of. v. Federal Trade Com- mUrton, 156 Fed. (2nd) 899, an order was leaned by the Commit- alon (Docket 4606) against etgbt concerns who comprlto all of the manntactarer* of crepo paper. Two of tlio respondents have their plants In Uassachnsettet two In Pennsylvania) two in Wisconsin, and one each in New York and Nw Jersey. They sold crepe paper on a tone price system with uniform delivered prices to all purchasers within a particular xone and uniform prico differentials among the xones. Thore was an unquestioned freight advantage by tba two manufacturers locatod in Wisconsin In a substantial territory and a corresponding advsneago on tbo part of the manufacturers located in New York, Pennsylvania, New Jer* sejr. and kfassachusetts. On appeal the Circuit Court of Appeals, In upholding tbo Commission's ordor, stated t "Tbs exlstenoe of substantia! similarity In delivered prices to , .sored territories having identical tone pries differentials, by . six manufacturers located at different places, was not a hsppon stanoe. Nor, looking at the situation objectively, wns it tlio 1 Inevitable end unetcapable result of keen competition lu a < )' standard product of lttvurlublo qualities. To bo suro, a k,,cn :'y`. competitor strlvo* to moot a lowored prico of a competitor irn- mediately upon becoming awnro of it, but be docs not atrivo to and iuvarlably match a prico which Is higher than that nt 1( , which bo neods protltably to tell, uniats by expratt, or tocit ' agreement, all oanufacturors have found oxlstunce to bo less slrtououa for all coucerned by merely sotting n prleo for tliroo sonoa In lb* wbolo Unltod Mtalos, and except for surb (Idcnllv' .cal) sono differentials, discarding and ignoring the substantial .V. ltom of freight. Wo aro unable to comprehend a mmiufnctur- er's dlsdsln of a natural ndvanlngo ultllxtng tlio snmo to gain local business, union lie were indoctrinated with tha belief (or forced by suporior economic competitors to align himself to 45 concerted action of Ulontlcal dolivored prices) that elimination of ali competition was economically proforsble. (P. 906.) "Ono glenco at tlio thrno xotio map for bulk crepe will (how tlio artificiality of the xono structure and intontlou to obviate any natural advnntago of localiou from price determination. "We think the artificiality and arbitrariness of tha sons atruo ture is so apparent it ran not withstand tbs inferonoe of agree ment. The Commission evidently could not believe that Wlscons.n companies would duprlvo themselves of the natural ben efit of location In the mldwcit, and proximity to the weit ovoi eastern competitors, were It not agreed that they would hav< equal chance for the eastern business, where moat of the crept paper manufacturers were located." (P. 907.) In Triangle Conduit it Cable Co., Ine. v. Federal Trade Commit eton, 108 Fed. (2nd) 175, an order was Issued by the Commluioi (Docket 4452) against thlrtoon manufacturer* of rigid steel oondui who control approximately 03'A> of the cajiaclty for the manufaotun of rigid steel eondult (Corn. Brief CCA p. 4). Their respective plant aro located primarily to Naw York, Pennsylvania, Illinois, Indiana West Virginia, and Ohio. They eold rigid eteel conduit on a basin) point aystem which reanltod In a uniform delivered price. Upoi appoal, tha Circuit Court of Appoala, In upholding the Commission', order, stated! "And tho extstence of a plan or method^hlsfr eqoallxaa the ds liverod oosts or prleos of competitors having widely dlfferen freight costs to glvsn destinations, eonatltntae strong avideno in Itsoif of an agreement to use such plan or system. (P. 179) "Tho rocord doarly establtshci ... that purchasers at or noa a plnco of production cuutd not buy mors cheaply from that nearby prouucor lhan from producer* locatou at graaur cii lancos, and producer* locatod at great dist*aces from,any gtra. purchaser quoted as low n delivered prloe us that quotod by th noarest producer. (P. 180) "Each sollor consciously Intends not to ntterapl the o any competition from his natural freight advanUgc tyrilorr b roduclng tho price, and In offect Invites tbs others to share th available business at watched prleo* In his natural market *a rs o o o CO CO mm. A 48 In Allied Paper Hills, el at, v. Federal Trade Commission (Daelded June 11, 1948), an order was Issued by Ilia Commission (Dookot 3760) against forty-two corporation* engaged in tlie maimfeature and distribution of book paper who control approximately 80J6 of the production capacity (Com. Brief CCA p. 2). Eight hiwo their plant* In Ohloi even In Haw York; seven in MnssnchusuttH; flro In Michigan | four In Pennsylvania; thrac in Wisconsin i two each In Virginia, Washington, and Minnesota, mid ono each in California : and Illinois. They sold on a xonc system In which tho slates of Horlii (Dakota, Sooth Dakota, Hobraska, Kansas, Oklahoma, Arkansas, Louisiana, Mississippi, Alabama, Georgia, South Carolina and FlorIda war* In xono 2--all states cast and north of these states wero in zone 1, Wyoming, Colorado end Texas ware In zone 3--all other statoa wore in zone 4. Upon appoal, the Circuit Court of Appeals, In upholding the Commission's order, statedt "Thepetitioners did with varying uniformity use tho zoning sys; tem of prieo quoting, and the extsteneo of tills plait which equal- isos delivered prices of competitors having widely diiTcrenl cost* :vat a givon destination, is strong evldenco In itself of an agree- tnent to use such plan." ,,e l j, , ' It Is clear that in each of these cases the Olrenlt Court of Appeals gave great weight and eouslderatlsa to the fact that eaoh of the respoadsnts subjected Itself to the restraint of not using a freight advantage which It had In selling In the territory unrounding lte own plant In return for a reciprocal restraint by each other respondent :, In the brleft before tho Circuit Court of Appoal* In tliceo cases the Commission's Counsel stressed and relied upon this same basic situation which was eharsolerixod as n "very Important eomnotitlvo factor(See Com. Brlof before 0. C. A. In V, S. Mahlers Ass 'a. el at, jv. Federal Trade Commission, pages 18 and 19 j Com, Brief before jO. C. A. in The Milk < Ice Cream Can Institute, el at. v. Federal jTrade Commission pages 23 and 20; Com. Brief before C. C. A. in Triangle Conduit 4 Cable Co., el at. v. Federal Trade Commission. pages 28, 32, 33, 63, 68; and Com. Brief before C. C. A. in Allied Paper Mills, el at. v. Federal Trade Commission, pages 18, 27, 38-41). " In several of these briefs tho Commission's attorneys havo slated be proposition of law as follows t /`Unifn participation by competitors In a particular systom .''.of doing business whore each Is aware of tho other'* activities .V la sufficient to establish an unlawful conspiracy If tho olToct lie ; ' restraint of interilato commoroo." fiv-rt ;-,h I-, 47 end havo rolled upon Die foregoing eases and upon li'm. Goldman Theatres v. Loom's Inc., 150 Fod. 738 (CCA 3, 1945); Bigelow r, II. K. 0. Radio Pictures, 150 Fed. 2nd, 877 (CCA 7,1945), and Inter state Circuit v. l/nitrd States, 308 U. S. 208. Those three eases, while 9 not concerned witli freight probionie, Invoivo aituatione where teeh of the dofandnnts voluntarily surrendered certain oxeiusive trading rights in return for a reciprocal surrender on the part of eaeh other defendant. Consequently, those decisions do not detract In the slight* oil from tho position hero taken by 8horw!n. In the enso ngntnst tho Cement Institute, ot al. (Docket 3187), Paragraph Eight of Count II of the Commission'* Complaint ooutains tho following language: "* * * Each enld producer knows that, In reciprocity for It* omis sion to offor competitive prices to prospective customers located in the consuming arcus adjacent to its mill (whore it has a natu ral advantage and receives Its highost actual prieo), each respec tive producer will receive the tamo immunity from prle* competi tion when it soils In tho consuming areas adjacent to other mills. A difference In delivered price of only ono cont (If) a barrel will deflect tho businos* away from ono manufacturer to another. Thus each reciprocally waives tho advantages and neutralise* tho disadvantages which it has In certain consuming areas as aforesaid in order that tbero may not anywhere be genuine com petition In prieo hetwoon producers whlob, ezoept for such recip rocal waiver and neutralization, would be la normal and active competition In prloo." In its Findings a* to the Foot* In tho Cement eaee the Commis sion foundi "This count (Count 11) furthor. nllegee that zuoh discrimina tion in prieo is tho result of respondents' combination to use the lnultlplo basing-point doltvorod-prloe systom and that under this system each respondent knows that In reciprocity for its omis sion to offor a competitive prieo to customers located In areas ; adjacent to Its mill, whore It has a natural advantage and re- eeivea Its highest netuol price, other respondent* will recipro cally waive Inolr advantages and thus the advantages and alt- . advantages of ooeli will be neutralized *!n order that there may not anywhere be gonulno competition In prloo.' .; " (ti) TTiion consideration of tho record, the Commly'on And* . that eaeh material allegation of Count II, andlri particular each, j of tho above-described allegations, Is sustained by the evidence. . (Par. 24) Tho ohove quoted language advaneos the same theory which rune . through the series of esses horolnabove dismissed. Thuz, tha Com- . * o o o CO CO '` . ' ,VVPliT*;V ,(--'l '7 notice, it is due to the quality of the document being filmed 48 million itself hoi recognized whnt tho situation must bo if (lie Commillion li to successfully infer tlio exigence of an illegal agroemont from similarity of pricing practice*. That litnallon li not present here. The Supremo Court, in tho caio of If. 3. v. International llarvetler Company, 274 U. S. 093 hold i "And tho fiot that eompetltoru may ice proper, in tiie cxorclso of their own judgment, to follow tho prices of another inanufactnror, dooe not oitnblieh any iupprelon of competition or I' ihow any itniiter domination. United Statci v. Steel Corpora . lion, inpro, 448. And ion Cement U/g. Protective Association , . v. United Stales, 208 U. S. 688,606.'' (p. 708). It la ona thing when tho Commiiiion may havo lomo boil* for drawing an Inference that prtco ilmilarity wax the roxult of un ogreomint, either expreei or implied t hot It li quite another tiling whon there U only the prteo atmltarity and no basis for Inferring n ilnixter oipeot. We have alroady demonitrated that 8iierwin'i pricing policy malt! In prloei whioh aro not Identical, to any inbxtant'al extent, with the prices of other respondents. We oontend, howovor, that to the extent auoh ilmilarity dooe exiet It represents nothing moro titan theiexerolie of 8tierwln'e Indepondont judgment and prudonco to get ,ai good a price for Iti produot aa possible under the circumstances prevailing. Thin la not onough to warrant any Inforonoa of participa tion In any unlawful action. Irrespective of what the iltuatlon may be with reipeet to the other retpondenU In this ease, It li an nndlipnted fact that 8hinrln had bo territorial advantage at any time over all other retpondenU. At all time* It hat had to ahare whatever freight advantage Chicago may havo had over other mannfeeturlng polnU with other reipon. dent*. (See Paragraph 0 or Scotlon VI horoof for factual juciii,ca tion of theee itaUmonU.) . In view of that ailualton, wo contend (hnt tho Coinmlxiion ie not warrantod In drawing any Inference that Shorwln partiolpaled In any planned common oourxo of notion. If eueh nrrangomeiit wn aotnally planned, It coatd, and would, havo funotioned fully without cooperation from Shorwln elnce tie eote plant wan covered, freightnrise, by other rospondenU at nil time*. Thoro would haw been no nduooment far Including Sherwin. It had nothing to contribute. Further, iU primary dietribution eot up through It* wnrohouxo ami retail itorea won ontlrely different from that of any of the principal iroduoer* hnd produced different price*. Under tho circumstances iere. prevailing, we inilat that Shorwln ! ontUlod to a dlimlnal of joent I of the Amended Complaint I* e* 49 VIII. INDIVIDUAL AOTS OP BHEEWIN NOT A VIOLATION OP SECTION S 0? TEDERAL TRADE COMMISSION AOT. It li proponed that each respondent ho required to cenae and dealit from "acting Individually, or otherwise, so ai knowingly to contribute to tho nccomplixhment of any of tho neta, praetiooi or tiling* liiiod in paragraphs numbored 1 through 6 of 8eetion I of this order". (Sec. II--Order l'rajioscd by Counsel for Commiiiion). Wo havo pruvtnuidy tnken tho position tlmt thoro 1* no such Imu o as is contended (Com. Brief, See. VI, par. C, p. 6) and argued (Com. . Brief, Hoe. VII, par. C, p. 22-2.3) by Counxal for tho Commission. Evon If there wore such an Issuo, tho proposed order (Section II), ` if onlcrol, would bo Illegal. Sueh order would prohlbtt, for oxample, an Individual respondent from Independently tolling lead pigmeuU at sjicciAod prlee differentials do|ioiiding upon slxo or typo of eon- > t ntnor ( or upon stxo or type of shipment to cuitomorx t or upon the typo of buainois in whioh cuitomere may ho ongaged. Thus the order ' weald ban all functional differentials and ban all quantity dtfferen- , ttsts tvm when reipendsnta lndlvldnally determine the amount of . any differentials granted and even though such differentials differ ! as to each respondent Since this section of tho proposod ordor Is predicated upon a claimed violation of the Ecdoral Trade Commission Aet, the protec tion nfforded by tho proviso clausos of Section 2 (a) of tho Clayton Act would not lie nvallnhlo. It cannot ho tho law that, by proceeding under tho KedornlTrmto Commission Aet rather than undor tho Clay- . ton Act in cnxox involving alleged individual prieo discriminations, tho Commission ean avoid tho impact of tho Congressional Intent which Is stated in Bee. 2 (a) of tho Clayton Aet ai follows t "Provided, that nothing horetn contained ahall prevent dlfforen- ` tlals which mako only duo allowance for difforenooe in the cost of . manufacture, sale, or dellvory resulting from tho dlfferingmeth- < oils or qoAntlitat In which auoh ootamodiUw aro to auoh par* chanort aoUl or dtllvarod.** We cannot liellevo Counsel f. . tho Commission are serlouity urging J a pro|Ulon which nullifies that provision of the Clayton Aet. - Counsel fur tho Commission prodlcnto their request for tho ; entry of Section II of the ordor proposed by them equarelv and solsly < upon the case of Triangle Conduit and Cable Co., el ai. v. Federal- Trade Commission (C. C. A. 7th, May 12, 1948). 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D,.. 111 Do b Motnos, Iowa. 68 8L Paul, Minn.... 72 Davenport, Iowa.. 38 23 32l/j 3G 43 60 ?0 32M. 26 IHfrt. truj* MM L.C.L. 23 39 V. 43 23 M 42 3U>/j 12 51 72 79 CG 111 63 72 38 u ou Dlftr* C.L. V4 32 32'/j 38 43 00 36 321/.. 26 19 391/, 43 23 61 42 39V4 10 (1) Freight ratea taken from CX 791 B-D. (2) Chicago selected, because it la location of Sherwln'a only plant and ia alao location of white lend plants of National and Inter national (now Eagle). (3) Citiea selected for following reasons: A. These citiea are the only. warehouse points for Bherwin at whieh Chicago had a freight advantage on the date of the applicable ratoa over other cities In whieh respondents other than Sherwin had plants. See RX 198 A ami D and CX 062 Z21 to establish warehouse points' Identity. See RX 199 to establish area in which Chicago had advantage. B. Those citiea are only ones in the Chicago froight advantage area, other than those listed In A, where freight Informa tion from Chicago la available. i l i 3 * T O o o CO CO CD *cp-> _aws_ o_ *_- S . ~ e ^ co CL. d: Cl . oO CD rt* P = _ -- = ~= 3 <i- =r n 3ra =Ctr 5*.p= CO Buffalo, N. Y. Cincinnati, Ohio Cleveland, Oliio Dotroit, Michigan Imliannpolis, Indiana Louisville, Ky. Newark, N. J. New York, N. Y. Pittsburg, I'a. ltochostcr, N, Y. Scranton, Pa. Syrncuao, N. Y. Wheeling, W. Vn. Decatur, 111. Dnltlmorc, Md. Tole<lo, Ohio Youngstown, Ohio St. Louie, Mo. Albany, N. Y. Boston, Mass. Philadelphia, Pa. Brooklyn, N. Y. Ill) cents )>or cwt. 24 25 2:i 28 24 42 42 41 ;t2 38 33 28 20 38 22 27 20 38 42 40 42 The average of the foregoing Freight Jlatea it M/. Tbe cities and the rates indicated are taken fr.'wi OX 79W>CDr Z3 TOCOO S' L 3 :1 ?" * fD a . cC g- 5 a r+ -- 3 c-** -- D> =T a APPENDIX V TAOULAtlOf* OP OATA SHOWN ON *7*4. AND AKlOJ a * auPkKmtrvrao my p a *l . t u t in o n /' n r*i i oiiwy min t wuvnr min t v*wo o* t*M *>" Pmt TOTAL WHITE LC.AP PKUVe.Re.0-6lQ,953 POUNDS amo ocwo*y mmy w ***>r cm*9 I'M*** #;VJ' ' :* '* ,* * * I-! fe ' ! L1'*44 TMH i *MO** . `NTH** MT<J *9* ta 0 VAC-wM. l* kMTk IMNII Uu Th an IAA MiMu n t A*.*. Mu*r w\ MV. tW,l NWHI HTNII 10 It tBttd 10537 u 19 4789 * 9 t 4 OO 4 * TA. * 4T 91 KX JL09 O C*'794 0 u to 9584 * t t 8 88 o 1 |CA l0 * C8/T94. O 9t to Lo x ?M^i 4* u gJ ?! to IU *04 > C ? * K 94 It 4 14 57 It** So tts 4 u> 5 15 R6** 794 1L M 6 7 50 to SWA 45 14 "UQ` itats 5* ICU* t79*4. A* At t 144 SO W 58 K 109 C ** *104.0 AS t sots Rl tO) N a tn 4 4* IT IU tot H on t)4 n tt 9 4 O t5 558 OM ttO4 T 9 *7 4499 Wiu tTo*o4 m 711 %i 14 teas 1 Ur_* *?*4 V W tuxf f*4 *y 44 9 Z 438 TuTiSTT Ul X,TI4 t J M 80*85 n to* T W ox 794 t tt to 9 500 MCll tTo4t.VU V. u tt 14000 t DSU fMIMl UV 44 St 80 01 ?;{& 4IB4 T 11 *5 4 . ` f !J.i *4 V 1 4 TO t tso 4*9 ZO t OO 9889 1950 4117 5 34318 too ZSoo 4tZ5 t 99T 90 T 5 *1, L 0 It to 9 t tt to 8 tl 10 It 1 t 1 It so to 775 t t 30 list 1480 IA Cm" too Ift 11J* So47 8955 418 loo V4 1 9599 4 1 4 I7E5 8090 1800 too* K4* Uoi 1 80 1 OO 5 9 TO rose 7 TOO 1 OO toot* f 7008 too 5 4010 too t 90 II * t 7* * * 4 4f| *^o *090 c **o IwrNni rc T MWCMVNMt IMHTNI M.CI.C %***** M| *< tj too 1 ! 1 * - m M Mr CM. M, ><W< o * 18 10 8 ' 4 19*1. * . 4*9 9 *004. 1 '\ 17 1 T48T o 7 98* . 1 . Ti /; a V* t 4 00* ' ; * ,?; t 1*9* .. ,, .7 1* v> il '* I 9*0 > :* *1 : '.Aoo'f 1 f.' i t *8 Oo ' ' 1 9QG + 1 9* .* 1 V.' 4 0 too 9 8**0 U ? Av-': 8 YW? ' 1 *900 J K; t 7oo : * ' 'mao''- *> 'm - . , -+*' "8 Vi.f .*'; 7! >* 7 \S ^ r`: .*> r ,70741* 11 I4t 4IT40O tot 1347!# tit ) Vfi .*. . SWa - ; ... , v 4*7*1 O 8 t *0 nuT It Tt J------- -- | mm~ II a t '.9 .V r,;i .4* ...... HNM* .2 t V* T I rf58!|pt.v;,',rO'' u > i *V: V&4V..' . AUUAT'On APPENDIX V PATA (MOWN ON CX7i ANO *1X105 a * u*kMinr*D oy mr o u TOTAL WHITE LC.AP PEUVaREP-6 10,955 POuttQS APPJDTDIX V. '; \,\-i .*1 'ftWOtMt* OO'' <*1 I ftOtl AV >QmT W Ot* ' M*'**kO*9 'Wl-1 ' A4AMyM*0N *tMyU0..W#A.OT, MA ftmwn * MM* V MV. ** ror 4 T#' : A ?-Vl4 00 ***. `1 410` nViir >o v 450 >**V- 4 V*: '4** UJ ,1 ico ioo s TTB 4 ' 1 I 90 T It 9 1 1* 1440 *1, 9oo 99 bkfcl ** Hun 0% W 1 9000 CM 1 too ft V* 1 1 OO 1 Ift tyfcki |MIS*MM***>MT.VCt-0 rMMf MTMBMt *M** Nfl Will* MftJ Nh H*I 1 1 | lOO 1 OO | .1 T00 49 1 4 - fto 1119 r'ffSO' :.'v. m "* 1s* ft 1444 NuM MMMMs lWM ft 14 10 9 4 1 ft 4 1 . 413 sl ft o o A 17 1 7937 9 7 38ft OrOM **Ma*ft a NMM ft 9 oo * 45 1 19 00 lA> lAk ft*M 0*00V ft ft T9 I*) mu. **, ' | i" " 190 OtVOlMft WiiMt* |v fc :) CMtCAQ* TO OH4*OV | |NV*ICO too OomiM 1 3 ftooo 9) T*tM. *>, | , ft H*VO*494 MM* | [ U V->1#5 IT 3o47 ,) T*1*h> MfMMf " | \ VV .10 ` 1990 TIB1 U i*l ITS 'Msoi U3 'Ml ?4*i*' 1* ft X Voji*' v$ ' > ". 12 V. '/ >14 4ft 415 V* 900 1 1^0 949 4 `'4 1*4 . e. .st ` 1 4 1 fOftft /1 to 1 9 *#7 3 1400 Ift > 75 T 9 590 ft too* t * mv*C4 * MM4' { ^1 0.0.9, .smssamsns------- (A) 0<M H Bo o m 900 ft* M TOftOO MM* | 5 .*r-i ;jv * : e IT4 1 ftOO I 4 oo i ft ooo ft *90 frOCMUM* M *SIMl ' | **W; .*. .* *'' it 5094 . 1 sa oo i 900 1 Too IS tMV. 40*0 PMM* 1 loojr.^ "`1 loo 1900 1 ftfto 1 4 449 1 1 Vo ft too (tl (r MM* (V !*** ' I J'l r vv<i z *si< *- i'/V'**;-" ' 14 1 oaS3:: j[ * ^.SSoo. 1 1 9 OO-* V- * .r '; I too* (*4* .14 o l 190 1*90 4 1 0 ft 1300 Z ftfto It 13 or 4 Slid' t 1 o oo St |*M. IA1S0 MM*ft U) ft IlllWtt* *IM1 % MOiQH MS. **M *rV Cd ft* wiwoin v*. $ *6cbjf ' 4 4X5 i 1 OO ? * MOOT IT 9 4 T9 i ! '!*' Ci* { .'. :: So * 7 4 90 0^5 fMVU*o to >sfTO* j -#* f<y 1 Too , 1 aia ft 4 130 9 1 t 405 f IS *41 1! loo MS KMI'IMi 1*4, Ift TO 4 ft* M-MUMOy, ^- j At* IW M4M*A<M y C; S'"**1 101 i *t i in 4*T*l w */ 9 3 | * O IS * ft * T IS ift* TT 9 190 1 494 1*9 M 49094 M *449 i --:v a ^ ... v.i-..^y & \ '.1 - ss T 1%. *g*j t . . ;./ . : ' l: : ;safc&sV..' ' t $*?** ' , - ; * ' '! iijzfiziiZkY ' ' " mm-ViMs ... - .*.. .- * iffe' ' Itggak ;..V;. . <"5 V : 23 APPENDIX VL "`f`rbz!:,irl,lou,ur `r!n l^volvid/ g"l `argoa bocaui,` rJ or truck load ordskw** londent't Mbit No. 205-A 205-C Commiesiou'e Exhibit No. 794-C ft4-E 205-D 205-E 205-F 794-F 704-0 704-1 205-0 795 J-l 205-L 704-P Invoice Number 4297] 4298 11409 9741 14433 9008 11413 13314 72G2 10839 495 4111 259001 23899 23898 25897 4030 4012 4025 4649 10380 10376 17498 8908 11574 11645 11005 33109 9355 14939 14930 14938 37153 38336 15510 13517 1 14433 1074 White Lead Billed 1035 175 200 400 471 230 348 75 1448 156 400 400 14ft 700 15 650 40 3181 ISO 00 350 500 24 2300 4123 862ft 4237 ft 28 60 2400 673 60 700 200 2400 1200 783 1626ft I ? AVw> . J ^^ cr o c=d* cpj 3o*-j- ;?? 3"" Q<. _,_ --< CD O. c Q. CD OO rt Co o O O CO CO '4 '/ `4'l* I  er_o CO c 5' 2L . -*< r+ a> C rr re o_ *z - Cu CO ~ o o O CO CO T CORRECTION The preceding document(s) has been refilmed to assure legibility and its image appears immediately hereafter. CD S` ^-C---L-Os5r*P S c# *< . CO 3 ~o CD C--9 . C>D "J n. a c< r oo * =3 rt- ~ Z3 JCD 5' APPENDIX m Wurr* Liu iiiSh imu x t * r Simwix-WnxuMi in Co mu iu io x 'i Exnurr 704 A-Z8 Wh ic h Ix v o l v x o Moil Th a i 1000 Po u x m Eac h Comm. Ex. No. 704 0 704 D 794 E 794 F 794 O 794 I 794 J 794 K 794 M 704 N 704 P 794 Q 794 R 794 T 794 U 794 Y 794 Z 794 Zl 794 Z2 794 Z4 794 Z5 794 ZO-7 1000# to 2000# 3 2 3 1 10 2 8 8 10 2 1 2 2 7 2 3 4 3 2 3 2000# to 4000# 1 6 2 2 2 12 4 2 1 1 3 C 1 2 4000# to 6000# 6000# to 10,000# 10,000# iind over 1 78 02 11 -v ' v\: vA T