Distillers Corporation-Seagrams, LTD., et Ai

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IN THE MATTER OF DISTILLERS CORPORATION-SEAGRAMS, LTD., ET AI" CONSENT SETTLEMENT IN REGARD TO TIm ALLEGED VIOLATION (H' THE FEDERAL TRADE COMMISSION ACT Docket 6047. Complaint, Sept. 24, 1952-IJeeision, Mat. , 1954 Where 13 corporations which were engag-ed in the production, sale, and distribution of alcoholic beverages; were direct or indirect subsidiaries of a Canadian corporation which had created or acquired and owned direct:y or indirectly a large number of subsidiary corporations thus engaged; were included, as such subsidiaries, among the members of such subsidiary organization, utilzed, among other purposes, to faciltate the sale and distribution of alcoholic beverages under various trade-marks, brands, and trade names so that at least some of said respondents should sell or distribute to persons other than those owned or controlled by any of them, i. e., those outside the group, such beverages for public consumption under trade-nJarks, brands and trade names which were in competition, except insofar as restricted as below set forth, with similar alcoholic beverages likewise sold or distributed as such to persons under different trade-marks, brands, and trade names, by other similar subsidiary respondents; were engaged in the interstate sale of such beverages to wholesalers or others located throughout the country; constituted collectively, along with their affliated and subsidiary corporations, one of the largest producers and sellers of alcoholic beverages in the United States, the gross sales of which as such were in excess of $200,000 000 in 1951; and, in the case of each, were in competition with one or more of the other respondents in such sales, except as hindered, lessened, or suppressed as below set forth- With intent and elfect of restricting and hindering their aforesaid competition in commerce in the sale and distribution of such beverages to persons other than those owned or controlled by any of them, through combination, conspiracy, cooperation, and planned common courses of action, and as part thereof, for more than five years past- (a) Haised, fixed, stabilzed, or maintained prices; (b) Discussed, conferred, and exchanp;ed information by correspondence and otherwise between and among themselves or with other concerns aftliated with or wholly or partly owned or controlled by them, for the purpose or with the effect of establishing or nUlintaining prices, terms, or conditions of sale or of securing adherence to prices, terms, or conditions of sale; ,) Met with ODe another or with retail liquor dealers or with representatives of retail liquor dealer associations for the purpose Or with the eflect of reaching agreement as to the employment of resale price maintenance COIltracts or arrangements; of adjusting or increasing resale prices after tax rate changes; and of reaching agreements as to the use of resale price nluintenance contracts or arrangements as a rneans of fixing, raising, stabilizing, or 111aintnining prices;

Used common directors or officers as a Dlcans of raising. fixing, stabilizing, or mainta.ining prices:

DISTILLERS CORPORATION-SEAGRAM' , LTD. , ET AL. , fJv 738 Consent Settlement (e) Policed or enforced, or attempted to police or enforce, ilegal resale price maintenance contracts or arrangements; and (f) Effected or maintained conditions, agreements, contracts, understandings or arrangements, both express and implied, requiring that distributors or other purchasers give notice in advance of dealing in any alcoholic beverage product produced or sold by any competitor or competitors of respondents the tendency of which was to preclude distributors of alcoholic beverages from sellng or handling products sold by competitors of respondents: Held, That such acts and practices constituted unfair acts and practices in commerce and unfair methods of competition therein. Before Mr. Frank Hier hearing examiner. Mr. Lynn O. Paulson and Mr. Joseph J. Gercke for the Commission. White Case of New York City, for respondents. CONSENT SETTLEMENT 1 Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission, on September 24, 1952, issued and subsequently served its complaint on the respondents named in the complaint, charging th.em wi(h the use of unfair methods of competition and/or unfair acts and practices in violation of the provisions of sflic1 Act.

The respondents, desiring that this proceeding be disposed of by the consent settlement procedure provided in Rule V of the Commission s Hules of Practice, solely for the purpose of this proceeding, any review thereof, and the enforcement of the order consented to, and conditioned upon the Commission s acceptance of the consent settlement hereinafter set forth, and in lieu of the answers to said complaint heretofore fled and which, upon acceptance by the Commission of this settlement, are to be withdrawn from the record, hereby (and prior to the commencement of the taking of any testimony herein) : (1) Admit ajj the jurisdictional allegations set forth in the complaint as to them.

(2) Consent that the Commission may enter the matters hereinafter set forth as its findings as to the facts, conclusion and order to cease and desist. It is understood that the respondents, in consenting to the Commission s entry of said findings as to the facts, conclusion 1 'The Commission s "Notice" announcing and promulgating the consent settlement as publisheu herewith, follows:

Counsel supporting the complaint having tated that evidence is not available to sup port the allegations of the complaint other than those covered by the consent settlement tendered by the parties in this proceeding, a copy of which is served hen:with, the said consent settlement was accepted by the Commission on March 2, 1954 and ordered entered of record as the Commission s findings as to the facts, conclusions, and order disposition of this proceeding.

The time for fiing report of compliance pursuant to the aforesaid order runs from the date of Rervice hereof.

740 FIWERAL TRADE COMJVIISSION DECISIONS' Findings 50 . T. C. and order to cease and desist, specifically refrain from admitting or denying that they have engaged in any of the acts 01' practices stated therein to be in violation of law.

(3) Agree that t.his consent settlement. ltu1Y be set aside in whole or in part uIldel' the conditions and in t.he m!lUler provjded in paragraph (f) of Rule V of the Commission s llllles of Practice. The admitted jurisdictional facts, the statement of the acts and practices which the Commission had reltSOn to believe were unlawful the conclusion based thereon, and the order to cease and desist, aJl of which the respondents consent may be entm'ed herein in final clisposition of this proceeding, are as follows: FLNDlXGS AS TO THE FACTS PARAGHAl'H 1. H.esponclent. .Joseph E. Se,\gmm & Sons, Inc. , is lL wholly owned subsidi'lry of Dist.JJers Corporrction-Seagnllns, Ltd. lmd is a corporation organized and existing under and by virtue of the hws of the St.ate of Indiana and has its main offlce and principal place of business at 405 Lexington Avenue, New York 17, New York. Respondent. Seagram-Distillers Corpomtion is a wholly owned snbsidiary of respondent ,Joseph E. Seagram & Sons, Inc., and is a corporation organized and existing under and by virtue of the laws of the State of Delaware and has its main offce and principal place of business at 405 Lexington Avenue, New York 17, New York. Respondent Distillers Products Sales C0lporation is a jointly owned subsidiary of respondents Seagram Hi. ; lJers Corporation and Calvert Distillers Corporation and is lL cOlporation organized and existing under and by virtue of the hws of the State of Massachusetts and has its main offce and prillcipltJ place of business at 648 Beacon Street Bost.on, Massachusetts.

Respondent Frankfort Distilleriet3, Incorporated, is ,\ wholly owned snbsicJiary of Chivas Brothers Import Corporation, a subsidiary of respondent Joseph E. Seagram & Sons, Inc., and is a corporation organized aud existing under and by virtue of the laws of the State of Delaware and has its main office and principal phlee of business at t05 Lexington Avenue, New York 17, New York. FrankfOlt Dist.illers Corporation is a wholly owned subsidiary of pspondent. Fn\Jldort Distilleries, Incorporated, and is a corporation ,rganized Hwl existing under and by virtue of the hn,"s of the State 01' )el:I\\al' , :Hld I::IS i;s main office and principal place of business at GO :oekefeJ1er Plaza, ;\PIY YOlk 17, Nmy York. HcsjJOli dent Panl .TOlWS and Company, Inc., is a WllOJJy owned subdinr.' of rp jJOll(lent ,Joseph E. Seagmm &: Sons, Inc., and is a eor- :Ition Olg:11ized :1nd existing lmder and by virtue of the Jaws of DISTILLERS. CORPOliATION -b",H 738 Findings the State of Maryland and has its main offce and principal place of business at Box 357, Baltimore, Maryland.

Respondent Hunterc'Vilson Distilling Co. , Inc., is a jointly owned subsidiary of respondents Joseph E. Seagram & Sons, Inc., and Gammagher & Burton, Inc., and is a corporation organized and existing under and by virtue of the laws of the State of Maryland and has its main offce and principalpJace of business at Dundalk, Baltimore, Maryland.

Respondent Gallagher & Burton, Inc., is a wholly owned subsidiary of respondent Joseph E. Seagram & Sons, Inc., and is a corporation organized and existing under and by virtue of the laws of the State of Kentucky and has its main oflee and principal place of business at Daltimore (Helay), Maryland.

Respondent Car'stairs Bros. Distilling Co., Inc., is a wholly owned subsidiary of respondent Joseph E. Seagram & Sons, Inc., and is a corporation organized and existing under and by virtue of the laws of the State of Maryland, and has its main offec and principal place of business at BaJtimOle (Relay), Maryland.

Respondent The Calvert Distilling Co. is a wholly owned subsidiary of respondent Joseph E. Seagram & Sons, Inc., and is a corporation organized and existing under and by virtue of the laws of the State of Maryland and has its main oflce and principal phwe of business at Daltimore (Relay), Marylanc1.

Respondent Calvert Distillcrs Corporation is a wholly owned subsidiary of respondent The Calvert DistiJing Co., and is a corporation organized and existing Imder :1ld by virtue of the laws of the State of Maryland, and has its main offce and principal place of business at 405 Lexington Avenue, New York 17, New York. Respondent Julius Kcsskr Distilling Co., Inc., is a wholly owner subsidiary of respondent The Calvert Distilling Co., and is a eorpon bon organized and existing under and by virtue of the laws of tl State of Indiana, and has its main offce and principal place of busill at Lawreneeburg, Indiana.

Respondent DistiJers Distributing Corporation is a wholly OW) subsidiary of respondent ,J oseph E. Seagram & Sons, Inc., and is a ( poration organized and existing under and by virtue of the laws of State of Delaware and has its main offce and principal place of )less at 405 Lexington A venue, New York 17, New York. PAR. 2. DistiJers Corporation-Seagrams, Ltd., a Canadian cor tion, has caused to be created or acquired, and owns, directly or thj subsidiary corporations, a large number of subsidiary eorporatio gaged in the production, sale and distribution of alcoholic bevr Among said subsidiaries are the respondents named herein, vi , , ...,v.v COMMISSION DECISIONS Findings 50 F. T. C.

seph E. Seagram & Sons, Inc., Seagram-Distilers Corporation, Distilers Products Sales Corporation, Frankfort Distileries, Incorporated, FrankfDIt Distilers Corporation, Paul Jones and Company, Inc., Hunter-Wilson DistiJJng Co., Inc., Gallagher & Burton, Inc. Carstairs Bros. Distiling Co., Inc., The Calvert Distiling Co., Calvert Distilers Corporation Julius Kessler Distiling Co., Inc., Distilers Distributing Corporation. This corporate subsidiary organization is utilized, among other purposes, to faciliate the sale and distribution of alcoholic beverages under various trade-marks, brands and trade names so that at least some of said respondents sell or distribute to persons other than those owned or controlled by any of the respondents, alcoholic beverages intended for ultimate consumption by the public under trade-marks, brands and trade names which are in competition, except insofar as competition has been restricted and lessened by the acts and practices herein set forth, with similar alcoholic beverages sold or distributed to persons other than those owned or controlled by any of the respondents under different trade-marks brands and trade names by other respondents herein, all of whom are subsidiaries of Distilers Corporation-Seagrams, Ltd. PAR. 3. Respondents sell or cause to be sold alcoholic beverages to wholesalers or others located throughout the several States of the United States and in the District of Columbia, and said alcoholic beverages, when sold as aforesaid, are transported to said wholesalers or others in states other than the state or place of production or sale of gaid alcoholic beverages, so that these respondents are now and have )een for more than five years last past engaged in trade and commerce t1 said products between and among the various States of the United states and in the District of Columbia.

The respondents named herein, and their affliated and subsidiary rporations, are collectively one of the largest producers and sellers alcoholic beverages in the United States. The gross sales of all mbers of the Seagram group were in excess of $200 000 000 in 1951. AR. 4. Each respondent has been and now is in competition with or more of the other respondents named herein, and with others aking, or seeking to make, sales of alcoholic beverages in commerce een and among the various States of the United States, except in- . as said competition has been hindered, lessened, restricted or sup- 3d by the combination and practices which they engaged in and are herein set forth.

more than five years last past, and continuing to the present 1e respondents hereinbefore named and described have acted for pose and with the effect of restricting and hindering competieommeree in the sale and distribution of alcoholic beverages to DISTILLERS CORPORATION- SEAGRA:vrS, LTD. , ET AL. 743 738 Order persons other than those owned or controlled by any 01 the respondents in that they have, through combination, conspiracy, cooperation and planned common courses of action, and as part and parcel thereof done and performed things, acts and practices as follows: (a) Raised, fixed, stabilized 01' maintained prices. (b) Discussed, conferred and exchanged information by correspondence and otherwise between and among themselves or with other concerns affliated with or wholly or partly owned or controlled by them for the purpose or with the effect of establishing or maintaining prices terms or conditions of sale or of securing adherence to prices, terms or conditions of sale.

(c) Met with one another or with retail liquor dealers or with representatives of retail liquor dealer associations for the purpose or with the efiect of rmtching agreement as to the employment of resale price maintenance contracts or arrangements; of adjusting or increasing resale prices after tax rate changes; of reaching agreements as to the use of resale price maintenance contracts or arrangements as a means of fixing, raising, stabilizing or maintaining prices. (d) Used common directors 01' offcers as a means of raising, fixing, stabilizing or maintaining prices.

(e) Policed or enforced, or attempted to police or enforce, ilegal resale price maintenance contracts or arrangements. (f) Effected or nmintained conditions, agreements, contracts, understanding or arrangements, both express and implied, requiring that distributors or other purchasers give notice in advance of dealing in any alcoholic beverage product produced or sold by any competitor or competitors of respondents, the tendency of which was to preclude distributors of alcoholic beverages from seJJing or handling products sold by competitors of respondents.

CONCLUSION The aforesaid acts and practices constitute unfair acts and practices and unfair methods of competition in interstate commerce within the intent and meaning of Section 5 of the Federal Trade Commission Act as amended.

ORDER TO CEASE AND DESIST It is ordered That the respondents, Joseph E. Seagram & Sons., Inc. Dis-a corporation, Seagram Distillers Corporation, a corporation, tillers Products Sales Corporation, a corporation, Frankfort Distilleries, Incorporated, a corporation, Frankfort DistiJers Corporation a corporation, Paul Jones and Complwy, Inc., a corporation, Hunter- , , Order 50 F. T. C. Wilson Distilling Co., Inc., a corporation, Gallagher & Burton, Inc. a corporation, Carstairs Dros. Distilling Co., Inc., a corporation, The Calvert Distin1ing Co., a corporation, Calvert Distillers Corporation, a corporation Julius Kessler Distilling Co. , Inc. , a corporation, and Disti1Jers Distributing Corporation, a corporation, directly or inclirectly, through their officers, agents, representatives or employees, in or in connection with the oflering for sale, sale or distrilmtion in commerce between and among the sevc ral States of the United Stat"s and in the District of Colmnhia, of alcoholic benrages, do forthwith cease and desist from entering into, cooperating in, canying out Ot. continuing any combination, conspiracy, coopemtion or planned conimon course of action between any two or more of said respondents engaged in competition in the sale of lllcollOlic beverages to persons other than those owned or controlled by any of the respondents, or between anyone or more of said respondents lWcl any wholly or party owned subsidiary or afIliatecl coneenl not a party hereto, engaged in competition in the sale of alcoholic bevemges to persons other than those owned or controlled by any of the respondents, to clo or pedorm llny of the following acts or th ing:;

(1) Haise, fix, stabilize or maintain prices; (2) Discuss, eonfer or exchange information for the purpose OJ' with the effect of establishing or maintaining prices, terms or conditions of sale, or of securing adherence to prices, terms or conelitions of sale; (;3) Exchange information with or meet with any rettlij liquor dealer or with any repn' sentative of luly retail liqnor dealer association, or others for the purpose or with the efiect of reaching agreement as to the employment of any resale price maintenance contract or arrangement, of adjusting or increasing l' sale prices after tax rate changes, or of reaehing agreement lls to the use of any resale price maintenance eon tract or arrangement as a me:ms of l'lising, fixing, sttlbiJizing or maintaining prices;

(4) Use common directors or offcers as tl Jlleans of l'nising, fixing, stabilizing or maintaining prices;

(5) Enter into any resale price maintenance contract or arrangement, or police, enforce, or attempt to police or enforce any such contract or arrangement.

1 t is jUT'the'l' (Ji'lei'ed That each of the respondents, directly or indirectly, through its of1eers, agents, representatives or employees, do forthwith cease and desist from effecting 01' maintaining any COlll1ition, agreement, contract, understanding or arrangement, express or implied, providing that any distributor or any other purchaser shall be required to give notice in advance of dealing in any alcoholic . , DISTILLERS CORPORATroN-H-,.I"m.

738 Order beverage product produced or sold by any competitor or competitors of respondents.

Providcd That nothing herein contained shall be construed to limit or otherwise affect any right with respect to resale price maintenance contracts or arrangements which any of the respondents may have under Section 5 of the Federal Trade Commission Act as amended by the McGuire Act (Public Law 542, 82d Cong., Chap. 745, Second Session, Approved July 14, 1952).

Provided further That if, as a result of any valid statute or regulation of any state, territory, or possession or subdivision thereof adopted pursuant to the Twenty-first Amendment to the Constitution of the United States, relating to the offering for sale, sale or distribution of alcoholic beverages, respondents, or any of them, or one or more of their wholly or partly owned subsidiaries or affliated concerns, as ,t condition of doing business in said state, territory, possession or subdivision thereof, engage in acts or practices which, upon a prima facie showing on the record herein (not overcome by answer) may be eonstrued by the Federal Trade Commission as violating any provision of the :foregoing order, the Commission agrees that it wiJJ reopen this order solely for the purpose of determining whether to alter, modify or set aside such provision and that it wil suspend such provision this order, pending disposition of the issue as to whether such provision should be altered, modified or set aside. This proviso sh,tll be without prejudice to, and nothing herein contained shall be construed to limit or otherwise affect, any defense which may otherwise be available to any respondent, in any proceeding to enforce the foregoing order or based on an alleged violation thereof. It is fl rthe1' ordered That Distillers Corporation-Seagrams, Ltd., a corporation, Seagram, Inc., a corporation, Distillers ,Varehouses, Inc. a corporation, ,Villiam .Jameson & Cornp,my, Inc., a corporation, Carstairs Distillers Corporation, a corporation, and The Pharma-Cra1' Corporation, a corporation, '11e hereby dismissed :from this proceeding; such dismissals are without prejudice.

It i8 further onlered That Seagram Sales Corporation, a corporation, Sen-Cal-Frank corporation, a corporation, aud Browne-Vintners Co., Ine., a corporation, are hereby dismissed from this proceeding. Provided, hmvever, tlmt the dismissal of these three corporations is without prejudice and is not to be construed in any sense as exempting said corporations from the application of any of the provisions of the order to cease and desist as are applicable to any eoncern whoJJ,) partly owned or controlled by OJ' affiliated with anyone or more 0 the respondents herein.

It i8 further ordered That the respondents shah, within tweJv months after the service upon them of this order, file with the Con ".....J.. COMMISSION DECISIONS Order 50 F. T. C. mission a report in writing setting forth in detail the manner and form in which they have complied with this order. Joseph E. Seagram & Sons, Inc.

By (Sgd) Frank R. Sehwengel President.

Seagram DistiUers Corporation By (Sgd) Herbert W. Evenson Executive V ice President.

DistiUers Products Sales Corporation By (Sgd) Frank R. Schwengel President.

Frankfort Distileries, Incorporated By (Sgd) Arthur Hilel' V ice President.

Frankfort Distilers Corporation By (Sgd) Ellis D. Slater President.

Paul Jones and Company, Inc.

By (Sgd) Alex F. Bracker President.

Hunter-Wilson Distiling Co., Inc.

By (Sgd) Frank K Desmond President.

Gallagher & Burton, Inc.

By (Sgd) James E. Friel V ice President.

Carstairs Bros. Distiling Co. , Inc.

By (8gd) James K Friel V ice President.

The Calvert Distiling Co.

By (Sgd) James E. Friel V ice President.

Calvert Distilers Corporation . By (Sgd) Tubie Resnik Executive Vice President.

Julius Kessler Distiling Co. , Inc.

By (Sgd) Frank R. Schwengel President.

Distilers Distributing Corporation By (Sgd) James K Friel V ice President.

Date: November 19, 1953.

The foregoing consent settlement is hereby accepted by the Federal ade Commission and ordered entered of record on this 2nd day \rch, 1954.

SCHEJ\'LEY INDUSTRIES , INC.) ET AL. 747 Syllabus