International Paper Company

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In THE Marrer OF INTERNATIONAL PAPER COMPANY CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SEC. 7 OF THE CLAYTON ACT Docket. 6676. Complaint, Nov. 6, 1956—Decision, June 25, 1957 Consent order requiring the world’s largest integrated paper company—with productive capacity more than three times as great as its largest competitor —charged with violation of Sec. 7 of the Clayton Act by its acquisition of the second largest producer of lumber in the Pacific Northwest and the _ corporation holding a majority of its stock, to divest itself within ten years of the stock interest held by the acquired companies in a major -- competitor in the West’ Coast market; forbidding it to acquire any interest in any competing mill for the next ten years: and requiring it to sell-to independent purchasers during the same period, 40% of the paper and . paperboard | production of its proposed Pacific Coast mill. Mr. L. E. Creel, Jr., and Mr. William R. MaHanna for the Commission.

Davis, Polk, Wardwell, Sunderland. é Kiendl, by Mr. Ralph M. Carson and Mr. George A. Brownell, of New York, N. Y., and Howrey and Simon, by Mr. Edward F. Howrey and Mr. Joseph B. Kennedy, Jr., of Washington, D. C., for respondent. Complaint The Federal Trade Commission, having reason to believe that the party respondent named in the caption hereof and hereinafter more particularly designated and described, has violated and is now violating the provisions of Section 7 of the Clayton Act (15 U.S.C. Title 15, Sec. 18), as amended and approved December 29, 1950, hereby issues its complaint, charging as follows: Paracrary 1. Respondent International Paper Company is a corporation organized in 1941 and doing business under and by virtue of the laws of the State of New York, with its principal office and place of business located at 220 East 42nd Street, New York, New York.

The present company was formed by the consolidation of 18 paper companies located throughout New England and Northern New York in 1898. It was then called the International Paper & Power Company. In 1941 the International Paper & Power Company consolidated and changed its name to International Paper Company (hereinafter called International). A substantial part of International’s production facilities were obtained through acquisition of other companies.

INTERNATIONAL PAPER CO. 1193 1192 - Complaint '- Respondent, directly and through its various subsidiaries, is engaged, among other things, in the business of producing and selling pulp, paper and paper products. Respondent, International, ranks as the world’s largest paper company. Its capacity to produce ‘paper and paperboard is more than three times as great as its largest competitor. It is now and for many years has been the price leader of the paper and paperboard industry. It is the leading producer of kraft board and ranks as a leading manufacturer in newsprint, dissolving pulp, book and bond papers, kraft papers, groundwood and towel papers. It produces from about one-quarter to one-half of the country’s total production of many types of paper and paperboard. For example, in 1954 it produced almost onethird of the total kraft liner board production in the United States. Respondent is also one of the largest owners of forest-land in the United States. The enterprise is a self-contained integrated unit in that it controls forestlands and conducts logging operations; produces its own pulp requirements; manufactures substantially all types of paper and paperboard; converts paper into paper products; and sells pulp, paper, paperboard and paper and paperboard products to converters, jobbers and other customers. Other activities include the production of fiberboard, insulating building ‘board and plywood; also the operation of a machine shop, coal mines, saw mills, and a steam electric plant. The active subsidiaries of International are engaged in one or more phases of the business described or in activities related thereto. As of July 1, 1956, respondent’s mills, for the manufacture of its various products, were located in twenty states of the United States and in three provinces in Canada. It has sixteen paper and pulp mills in the United States and six paper and pulp mills in ‘Canada. In addition to these primary mills it also has fourteen shipping container plants, two of which are located in Canada, and ten ‘milk container plants, as well as many other facilities for converting paper and paper products.

_ As of July 1, 1956, respondent owned or had access to 21,084,809 acres of forestland in the United States and Canada. In the United States respondent owns 4,540,593 acres and leases 387,456 acres which is several times as large as the holdings of any of its principal com- ‘petitors in the pulp and paper industry. In Canada respondent owns 1,248,409 acres and holds Government licenses on 14,905,351 acres. Respondent’s forestlands in the United States are located in nine southern states and in four northeastern states. Complaint 53 F.T.C.

During the six year period from January 1, 1950, to December 31, 1955, respondent’s net sales increased from $498,415,714 to $796,421,637, an increase of 59.8 percent. During this same period its total assets rose from $408,840,630 to $620,057,436, an increase of 51.7 percent; and its net profit increased from $66,647,151 to $83,105,016, an increase of 24.7 percent. International’s rate of return on stockholders’ investment after taxes for the years 1954 and -1955 were higher than that of the three next largest integrated companies in the paper and paperboard industry. Prior to and since November 5, 1956, respondent has been and is now engaged in substantially every facet of the paper and paperboard industry; it has produced and is now producing virtually all types of pulp, paper and paperboard, and also converted products from paper and paperboard.

Respondent purchases materials used in the manufacture of its paper and paper products, as described in subparagraph eight of Paragraph 1 herein, in commerce, as “commerce” is defined in the Clayton Act, and offers to sell, sells and distributes said products in said commerce in several of the states of the United States to converters, wholesalers and other purchasers of pulp, paper, paperboard and converted products.

Par. 2. The Long-Bell Lumber Corporation, prior to November 5, 1956, was a corporation organized in 1924 and doing business under and by virtue of the laws of the State of Maryland, with its principal office and place of business located at 926 Grand Avenue, Kansas City, Missouri. It was a holding corporation whose assets consisted of cash and 50.61 percent of the stock of the Long-Bell Lumber Company.

‘Par. 3. The Long-Bell Lumber Company, prior to November 5, 1956, was a corporation, organized in 1884, doing business under and by virtue of the laws of the State of Missouri, with its principal office and place of business located at 926 Grand Avenue, Kansas City, Missouri.

The Long-Bell Lumber Company, hereinafter referred to as Long- Bell, and its subsidiaries, operated in substantially every phase of the lumber industry from ownership of standing timber to the operation of retail building supply yards. Long-Bell also ranked as the second largest producer of lumber in the Pacific Northwest, and as one of the leading producers of plywood. Its major products were dressed and treated lumber, plywood, flooring, doors and various other lumber products. It also produced chips from saw mill residuals and other material suitable for the manufacture of pulp. As of December 31, 1955, it owned INTERNATIONAL PAPER CO. 1195 1192 Complaint and operated 100 retail lumber yards and six jobbing establishments through which all types of building materials were distributed. These facilities were located in the States of Arkansas, Colorado, Kansas, Missouri, New Mexico, Oklahoma, Oregon, Texas and Washington. Long-Bell operated lumber producing plants at Longview, Washington, Weed and Etna, California, Gardiner, Reedsport, Vaughn, Austa and Vernonia, Oregon, Sheridan, Arkansas, and at Quitman, Mississippi. Its plywood plants were located at Longview, Washington, Weed, California, and Vaughn and Gardiner, Oregon.

As of December 31, 1955, Long-Bell owned a total of 467,672 acres of forestland. Of these lands, 87,000 acres were in the State of Washington, 160,000 acres in Oregon, 60,000 acres in California, and an aggregate of 160,672 acres in the States of Arkansas, Louisiana, Oklahoma and Texas. This land contained approximately 2,704,- 000,000 board feet of merchantable timber of which 2,600,000,000 board feet, mostly Douglas fir, were located in the three Pacific Coast states. In 1955 Long-Bell produced a total of 514,912,225 board feet of lumber and manufactured 138,459,280 square feet of plywood.

During the six year period from January 1, 1950, to December 31, 1955, Long Bell’s net sales increased from $102,179,867 to $105,748,- 975. For this same period its total assets increased from $68,136,697 to $90,654,941, showing an increase of 33 percent. During 1955 Long-Bell had under investigation and consideration a proposed plan to engage in the production of kraft pulp and paper in connection with the operation of its timber resources and mills on the West Coast. It had received favorable reports to the effect that a pulp mill with a capacity to produce 200-300 tons per day of kraft fourdrinier linerboard could be profitably erected and operated. Due to the acquisition, hereinafter set forth, of Long- Bell by International, the proposed plan to erect a mill was not considered further.

Long-Bell purchased materials, including logs, used in the manufacture of lumber and lumber products, as described in subparagraph three of Paragraph 3 herein, in commerce, as “commerce” is defined in the Clayton Act, and offered to sell, sold and distributed said products in said commerce in several of the states of the United States to jobbers, wholesalers and other purchasers. Par. 4. On or about November 5, 1956, respondent’s stockholders and the stockholders of Long-Bell Lumber Corporation and Long- Bell voted upon and approved a plan of merger which had previously been adopted by the boards of directors of the said Complaint 53 F.T,C.

corporations. In accordance with this merger plan 900,000 shares. of authorized but unissued stock of International was exchanged for all or substantially all of the outstanding shares of common: stock of the Long-Bell. Lumber Corporation and Long-Bell. The approximate value of the International stock to be exchanged is. $117,000,000.

Par. 5. International proposes to build additional facilities to produce pulp, paper and paper products which will substantially utilize the timber assets obtained from Long-Bell by the aforesaid acquisition from the Long-Bell Lumber Corporation and Long-Bell- The proposed additional facilities are as follows: (1) Erection of a newsprint and bleached board mill near Pine. Bluff, Arkansas. This proposed mill will produce newsprint at the rate of 130,000 tons annually, and bleached board at the rate of. 165,000 tons annually.

(2) Erection of a 400-500 ton per day kraft board mill in western Oregon. The annual capacity of this proposed mill would be from. 130,000 to 165,000 tons.

(8) Erection of a shipping container plant at San Jose, California, with an annual rate of production from 17,000 to 20,000 tons.

(4) Erection of a milk container plant at Turlock, California. This proposed plant would have a capacity of approximately 10,000: to 12,000 tons annually.

- The eleven western states, Washington, Oregon, California, Idaho, Utah, Nevada, Montana, Wyoming, Colorado, Arizona5 1 2 7 2 7 1852 1927 85 38 96.810257 ands 1 2 7 2 8 1974 1898 117 79 90.915276 New.4 1 2 7 3 0 443 1987 1640 55 -1 5 1 2 7 3 1 443 1992 178 50 96.711098 Mexico,5 1 2 7 3 2 644 1990 207 51 96.151031 comprises 1 2 7 3 3 876 2002 25 25 96.598679 a5 1 2 7 3 4 925 1992 194 46 96.249641 separates 1 2 7 3 5 1142 1987 243 51 96.143311 marketing5 1 2 7 3 6 1411 2000 95 26 96.431427 areas 1 2 7 3 7 1534 1987 70 48 96.491280 for5 1 2 7 3 8 1628 1988 72 38 96.671509 thes 1 2 7 3 9 1725 1988 104 39 96.817719 sales5 1 2 7 3 10 1854 1988 49 39 93.293602 of5 1 2 7 3 11 1930 2002 153 38 92.824860 paper-4 1 2 7 4 0 443 2048 1644 54 -1 5 1 2 7 4 1 443 2054 132 41 96.255768 boards 1 2 7 4 2 603 2053 85 39 96.739822 ands 1 2 7 4 3 716 2064 141 27 96.205147 coarse5 1 2 7 4 4 886 2063 167 39 95.659508 papers.5 1 2 7 4 5 1109 2049 91 48 95.354446 Thes 1 2 7 4 6 1228 2048 287 40 95.395180 construction5 1 2 7 4 7 1545 2049 48 38 96.537537 of5 1 2 7 4 8 1621 2051 71 37 96.502213 thes 1 2 7 4 9 1722 2051 208 50 96.303345 proposed5 1 2 7 4 10 1959 2051 128 50 77.698380 kraft,4 1 2 7 5 0 441 2110 1649 54 -1 5 1 2 7 5 1 441 2116 93 40 96.175003 mills 1 2 7 5 2 557 2115 47 39 96.582558 in5 1 2 7 5 3 628 2114 173 50 95.436676 Oregon5 1 2 7 5 4 825 2112 92 39 95.675461 will5 1 2 7 5 5 941 2112 50 39 93.029510 be5 1 2 7 5 6 1017 2110 348 41 91.774315 International’s5 1 2 7 5 7 1393 2110 92 40 96.586937 firsts 1 2 7 5 8 1511 2110 167 51 95.810051 facility5 1 2 7 5 9 1708 2112 69 38 96.220711 for5 1 2 7 5 10 1803 2112 71 39 92.752510 thes 1 2 7 5 11 1902 2113 188 50 90.195457 produc-.4 1 2 7 6 0 443 2171 1648 57 -1 5 1 2 7 6 1 443 2179 90 39 96.205963 tions 1 2 7 6 2 556 2177 48 40 96.205963 of5 1 2 7 6 3 627 2190 135 38 96.395401 papers 1 2 7 6 4 787 2175 84 39 96.304138 ands 1 2 7 6 5 896 2173 270 52 96.692139 paperboard5 1 2 7 6 6 1189 2173 46 39 96.829300 in5 1 2 7 6 7 1259 2171 89 41 96.550972 this5 1 2 7 6 8 1376 2177 185 35 65.083771 western’5 1 2 7 6 9 1581 2167 167 65 74.803497 market.5 1 2 7 6 10 2087 2211 4 12 3.680946 ;3 1 2 8 0 0 440 2234 1648 298 -1 4 1 2 8 1 0 493 2234 1595 55 -1 5 1 2 8 1 1 493 2241 139 39 96.548363 When5 1 2 8 1 2 666 2239 59 37 95.350380 all5 1 2 8 1 3 758 2236 49 40 96.475021 of5 1 2 8 1 4 841 2236 73 39 96.722000 thes 1 2 8 1 5 949 2235 131 45 96.599686 above5 1 2 8 1 6 1116 2235 210 50 96.198395 proposed5 1 2 8 1 7 1362 2234 114 39 94.346558 mills5 1 2 8 1 8 1512 2248 70 26 95.274223 ares 1 2 8 1 9 1616 2235 233 50 91.724930 completed5 1 2 8 1 10 1886 2236 202 53 88.679779 Interna-.4 1 2 8 2 0 443 2296 1641 54 -1 5 1 2 8 2 1 443 2301 167 40 90.967285 tional’s5 1 2 8 2 2 631 2300 108 39 96.830246 totals 1 2 8 2 3 760 2312 136 38 96.684906 papers 1 2 8 2 4 918 2297 85 39 96.501060 ands 1 2 8 2 5 1025 2296 269 51 96.006264 paperboard5 1 2 8 2 6 1317 2296 253 50 95.882172 productions 1 2 8 2 7 1593 2296 45 39 95.882172 in5 1 2 8 2 8 1661 2297 71 38 96.467735 thes 1 2 8 2 9 1754 2296 161 41 96.458069 United5 1 2 8 2 10 1940 2296 144 43 96.529480 States4 1 2 8 3 0 444 2357 1638 53 -1 5 1 2 8 3 1 444 2363 87 39 96.415466 will5 1 2 8 3 2 554 2363 49 39 96.911209 be5 1 2 8 3 3 625 2361 216 40 96.350174 increased5 1 2 8 3 4 865 2359 58 51 96.189735 by5 1 2 8 3 5 948 2361 91 36 96.862907 15.45 1 2 8 3 6 1060 2362 173 46 96.087143 percent5 1 2 8 3 7 1257 2358 86 39 96.567192 ands 1 2 8 3 8 1367 2357 55 40 96.567192 its5 1 2 8 3 9 1449 2358 206 39 96.521873 bleached.5 1 2 8 3 10 1671 2358 131 39 95.757957 boards 1 2 8 3 11 1827 2359 255 50 96.241188 production4 1 2 8 4 0 440 2418 1640 57 -1 5 1 2 8 4 1 440 2425 55 50 96.944290 by5 1 2 8 4 2 521 2426 88 37 94.608139 43.15 1 2 8 4 3 638 2426 182 47 92.263176 percent.5 1 2 8 4 4 876 2419 349 39 83.330292 International’s5 1 2 8 4 5 1255 2418 254 51 96.148224 productions 1 2 8 4 6 1538 2419 48 38 96.193352 of5 1 2 8 4 7 1614 2419 230 50 96.663712 newsprint5 1 2 8 4 8 1876 2419 71 39 96.422958 for5 1 2 8 4 9 1975 2419 105 42 96.422958 both4 1 2 8 5 0 443 2480 1586 52 -1 5 1 2 8 5 1 443 2488 69 37 96.721024 thes 1 2 8 5 2 538 2484 162 43 96.028313 United5 1 2 8 5 3 727 2483 142 40 95.884834 States5 1 2 8 5 4 897 2481 84 40 96.505539 ands 1 2 8 5 5 1009 2480 177 42 96.457077 Canada5 1 2 8 5 6 1213 2480 89 39 96.234184 will5 1 2 8 5 7 1329 2481 49 39 96.888947 be5 1 2 8 5 8 1406 2480 213 41 96.257751 increased5 1 2 8 5 9 1648 2481 55 51 96.024170 by5 1 2 8 5 10 1732 2484 84 37 96.024170 14.35 1 2 8 5 11 1846 2487 183 45 96.350342 percent.3 1 2 9 0 0 440 2540 1646 300 -1 4 1 2 9 1 0 492 2540 1589 53 -1 5 1 2 9 1 1 492 2547 101 38 95.891762 Par.5 1 2 9 1 2 623 2547 36 37 95.846375 6.5 1 2 9 1 3 687 2545 91 38 95.996887 Thes 1 2 9 1 4 807 2542 123 40 96.324699 effects 1 2 9 1 5 958 2542 48 40 96.216377 of5 1 2 9 1 6 1035 2542 71 38 96.196846 thes 1 2 9 1 7 1136 2541 216 39 96.180168 aforesaid5 1 2 9 1 8 1382 2540 249 53 95.667915 acquisitions 1 2 9 1 9 1661 2541 55 50 95.667915 by5 1 2 9 1 10 1747 2542 254 51 96.596695 respondents 1 2 9 1 11 2031 2545 50 39 96.669495 of4 1 2 9 2 0 443 2602 1643 55 -1 5 1 2 9 2 1 443 2610 68 38 91.745193 thes 1 2 9 2 2 545 2606 239 51 90.733772 Long-Bell5 1 2 9 2 3 819 2603 187 40 96.303474 Lumber5 1 2 9 2 4 1043 2602 286 53 96.303474 Corporations 1 2 9 2 5 1367 2603 84 38 92.968315 ands 1 2 9 2 6 1488 2603 237 52 92.482590 Long-Bell5 1 2 9 2 7 1760 2617 98 37 96.183258 may5 1 2 9 2 8 1896 2603 50 40 90.843269 be5 1 2 9 2 9 1984 2603 102 40 90.843269 sub-4 1 2 9 3 0 440 2664 1640 54 -1 5 1 2 9 3 1 440 2668 220 50 96.204346 stantially5 1 2 9 3 2 678 2672 44 34 96.452011 to5 1 2 9 3 3 740 2667 132 38 96.598717 lessens 1 2 9 3 4 891 2664 276 51 96.814812 competitions 1 2 9 3 5 1186 2678 49 26 95.975586 or5 1 2 9 3 6 1253 2670 44 34 96.299995 to5 1 2 9 3 7 1315 2664 102 40 96.787766 tends 1 2 9 3 8 1436 2669 43 35 96.884529 to5 1 2 9 3 9 1498 2669 135 35 96.409325 creates 1 2 9 3 10 1654 2678 24 24 96.300842 a5 1 2 9 3 11 1697 2666 224 50 96.458153 monopoly5 1 2 9 3 12 1942 2664 45 40 96.645081 in5 1 2 9 3 13 2005 2666 75 40 96.896667 thea 1 2 9 4 0 444 2724 1636 53 -1 5 1 2 9 4 1 444 2730 101 40 96.080566 lines5 1 2 9 4 2 570 2729 47 39 95.921501 of5 1 2 9 4 3 640 2740 241 37 95.921501 commerce,5 1 2 9 4 4 907 2739 45 27 96.124321 as5 1 2 9 4 5 976 2727 280 39 96.059761 “commerce”5 1 2 9 4 6 1281 2726 37 40 96.566917 is5 1 2 9 4 7 1344 2726 164 40 96.071182 defined5 1 2 9 4 8 1534 2726 44 39 95.531593 in5 1 2 9 4 9 1605 2727 71 38 95.531593 thes 1 2 9 4 10 1701 2724 182 53 96.405670 Clayton5 1 2 9 4 11 1910 2727 97 49 96.674904 Act,5 1 2 9 4 12 2033 2726 47 42 96.985695 in4 1 2 9 5 0 444 2787 1581 53 -1 5 1 2 9 5 1 444 2790 133 41 96.619949 which5 1 2 9 5 2 601 2789 257 51 96.235199 respondents 1 2 9 5 3 881 2788 86 39 96.098320 ands 1 2 9 5 4 991 2788 72 39 96.688118 thes 1 2 9 5 5 1087 2787 93 40 96.730011 said5 1 2 9 5 6 1206 2787 199 51 96.539268 acquired5 1 2 9 5 7 1429 2787 238 51 96.426338 companies5 1 2 9 5 8 1693 2801 105 26 96.685234 were5 1 2 9 5 9 1824 2788 201 51 96.664597 engaged.3 1 2 10 0 0 444 2849 1641 178 -1 4 1 2 10 1 0 494 2849 1590 54 -1 5 1 2 10 1 1 494 2854 120 38 96.224747 More5 1 2 10 1 2 638 2851 270 52 96.224747 specifically,5 1 2 10 1 3 933 2850 74 39 96.985321 thes 1 2 10 1 4 1034 2849 213 40 96.675926 aforesaid5 1 2 10 1 5 1274 2849 144 40 95.912102 effects5 1 2 10 1 6 1443 2849 179 50 96.030922 include,5 1 2 10 1 7 1650 2862 153 38 96.030922 among5 1 2 10 1 8 1830 2850 154 49 96.632759 others,5 1 2 10 1 9 2010 2851 74 42 96.935501 thea 1 2 10 2 0 444 2910 1640 54 -1 5 1 2 10 2 1 444 2915 139 39 96.032845 actual5 1 2 10 2 2 606 2927 49 26 96.735794 or5 1 2 10 2 3 680 2911 207 53 96.603310 potential5 1 2 10 2 4 912 2911 211 51 96.630920 lessening5 1 2 10 2 5 1147 2911 50 39 96.487434 of5 1 2 10 2 6 1220 2910 276 52 96.018585 competitions 1 2 10 2 7 1521 2924 48 26 96.229721 or5 1 2 10 2 8 1595 2924 24 26 96.633926 a5 1 2 10 2 9 1644 2912 203 50 96.423012 tendency5 1 2 10 2 10 1874 2916 45 34 96.858696 to5 1 2 10 2 11 1944 2917 140 37 96.088585 create4 1 2 10 3 0 444 2972 1641 55 -1 5 1 2 10 3 1 444 2990 24 26 94.456039 a5 1 2 10 3 2 494 2976 227 51 92.463089 monopoly5 1 2 10 3 3 748 2975 45 39 96.627777 in5 1 2 10 3 4 820 2975 96 39 96.374443 that5 1 2 10 3 5 942 2973 73 39 96.374443 thes 1 2 10 3 6 1043 2972 253 51 96.524361 acquisitions 1 2 10 3 7 1324 2973 48 39 93.268532 of5 1 2 10 3 8 1400 2973 236 52 92.167030 Long-Bell5 1 2 10 3 9 1665 2973 55 50 96.375847 by5 1 2 10 3 10 1749 2973 336 42 93.408806 International: INTERNATIONAL PAPER CO. 1197 1192 Decision (1) May-substantially lessen competition in the western states by foreclosing the probable entry of Long-Bell, as well as other potential entrants into the paper industry and also lessen the opportunities for existing paper companies to expand. . (2) May substantially lessen competition in the western states by reason of leverage which may be exerted by the utilization of the large natural and financial resources and the. extensive operations International now has in other markets.

(3) May substantially lessen competition in the western states by resulting in the entry into that market of a seller which is unlikely to engage in price competition.

(4) May substantially lessen competition or tend to create a monopoly by the increase of International’s share of the country’s production for various paper products and thereby substantially lessen the proportion held by competitors.

(5). May. substantially. lessen. competition or tend to create a monopoly in the nation as a whole by the increase of the present dominant position of International in the paper and paperboard industry.

Par. 7. The foregoing acquisition, acts and practices of respondent, as herein alleged, constitute a violation of Section 7 of the Clayton Act (U.S.C. Title 15, Sec. 18), as amended and approved December 29, 1950.

Inrriat Decision By ABNER E. Lirscoms, Heartnc EXAMINER The complaint herein was issued on November 6, 1956, charging Respondent with increasing its present dominant position in the paper and paperboard industry by the acquisition of Long-Bell Lumber Corporation and Long-Bell Lumber Company, thereby tending substantially to lessen competition or to create a monopoly in commerce, in violation of the antimerger provision of § 7 of the Clayton Act (U.S.C. Title 15, § 18), as amended and approved December 29, 1950.

On May 10, 1957, Respondent, its counsel, and counsel supporting the complaint entered into an Agreement Containing Consent Order To Divest And To Cease And Desist, which was approved by the Director and the Assistant Director of the Commission’s Bureau of Litigation, and thereafter submitted to the Hearing Examiner for consideration.

Respondent International Paper Company is identified in the agreement as a New York corporation, with its office and principal place of business located at 220 East 42nd Street, New York, New York.

Decision 53 ETC.

Respondent admits all the jurisdictional facts alleged in the complaint and agrees that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations.

Respondent, in the agreement, waives any further procedure before the Hearing Examiner and the Commission; the making of findings of fact or conclusions of law; and all the rights it may have to challenge or contest the validity of the order to divest and to cease and desist entered in accordance with the agreement. All parties agree that the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and the agreement; that the order to divest and to cease and desist as contained in the agreement shall have the same force and effect as if entered after a full hearing, and may be altered, modified or set aside in the manner provided for other orders; that the complaint herein may be used in construing the terms of said order; and that the agreement is for settlement purposes only and does not constitute an admission by Respondent that it has violated the law as alleged in the complaint.

The order contained in the agreement does not require the Respondent, International Paper Company, to divest itself of the assets of the Long-Bell Lumber Corporation or the Long-Bell Lumber Company, which it acquired in 1956. It does, however, require Respondent to divest itself of all the stock in the Longview Fibre Company which it acquired through the acquisition of the Long-Bell Lumber Company.

In support of the proposed order submitted in the agreement, counsel in support of the complaint state that in the light of all the circumstances of which they are aware, the order will afford the public immediate and adequate relief, and competition will be well served thereby. They also point out that the proposed order prohibiting future acquisitions appears to assure a source of supply for smaller non-integrated converters and wholesalers, and thereby affords competitors at the production, conversion and jobbing levels ample time to reappraise the market and plan their future development.

' On the basis of counsel’s statement, it appears that the agreement and order contained therein constitute a satisfactory disposition of this proceeding. Accordingly, in consonance with the terms of the aforesaid agreement, the Hearing Examiner accepts the Agreement Containing “Consent Order To Divest And To Cease And Desist; finds that the Commission has jurisdiction over the Respondent and INTERNATIONAL PAPER CO. 1199 1192 Order over its acts and practices as alleged in the complaint; and finds that this proceeding is in the public interest. Therefore, It is ordered, That Respondent, International Paper Company, shall divest itself absolutely, in good faith, of all the stock in Longview Fibre Company which was acquired through the merger of The Long-Bell Lumber Corporation and The Long-Bell Lumber Company with Respondent. As an initial step in such divestiture Respondent shall forthwith transfer said stock to a bank or trust company to be approved by the Commission as voting trustee, under a voting trust agreement in a form to be approved by the Commission. Such divestiture shall be completed by sale of said stock within ten years from the date of this order. Respondent shall not sell any such stock, directly or indirectly, to any officer, director, employee, agent or subsidiary of, or anyone otherwise directly or indirectly under the control or influence of, Respondent or any of its officers or directors.

It is further ordered, That for a period of ten years from the date of the issuance of this order by the Federal Trade Commission, Respondent shall cease and desist from acquiring, directly or indirectly, through subsidiaries or otherwise, by merger, consolidation, purchase of physical assets, or acquisition of stock or other share capital, any interest in any paper or paperboard mill located in any present state of the United States which competes with any mill of Respondent.

It is further ordered, That for a period of ten years from the date of the issuance of this order by the Federal Trade Commission, Respondent shall cease and desist from acquiring, directly or indirectly, through subsidiaries or otherwise, by merger, consolidation, purchase of physical assets, or acquisition of stock or other share capital, any interest in any plant located in any present state of the United States which produces products made or converted from paper or paperboard and which competes with any plant of Respondent.

It is further ordered, That from the date of the commencement of commercial production at its proposed paper and paperboard mill in the Pacific Coast area and until ten years from the date of this order Respondent shall cease and desist from supplying paperboard manufactured at such mill to any purchaser, or to any converting plant owned or controlled by Respondent unless Respondent shall comply with the following conditions: Prior to the commencement of each calendar year in which paperboard is to be supplied, Respondent shall contract to sell during such calendar year to non-integrated wholesalers, non-integrated con- 51107160 77 Order 53 F.T.C.

verters and other non-integrated purchasers located in the eleven Western state area (meaning in each case purchasers who are not engaged, nor to the knowledge of Respondent controlled by others engaged, in such area in the manufacture of paperboard of a type and grade similar to that manufactured at such mill of the Respondent), a number of tons of paperboard equal to 40% of the tons of paperboard expected to be produced at such mill during the calendar year, provided, that if a lesser amount of such paperboard is so contracted to be sold prior to the commencement of such calendar year, then a number of tons of paperboard equal to the balance of such 40% shall be made available by the Respondent to nonintegrated purchasers of the character described above who thereafter make written request to purchase any part thereof during such calendar year, to the extent and subject to the terms set forth below: 1. The number of tons included in such balance shall be reduced at. the end of each month during such calendar year by the number of tons for which contracts of sale are made during such month, or by an amount equal to one-twelfth of the original balance, whichever is greater; ;

2. All contracts of sale shall be subject to Respondent’s standard credit requirements, shall be at Respondent’s standard prices, and on its standard terms and conditions, in such area, and in weights, finishes and roll widths regularly made at such mill. No such contract need call for deliveries at a rate disproportionate to the uncontracted for expected production of paperboard at such mill during the balance of such year.

It is further ordered, That from the date of the commencement of commercial production at its proposed paper and paperboard mill in the Pacific Coast area and until ten years from the date of this order Respondent shall cease and desist from supplying paper manufactured at such mill to any purchaser, or to any converting plant owned or controlled by Respondent, unless Respondent shall comply with the following conditions:

Prior to the commencement of each calendar year in which paper is to be supplied, Respondent shall contract to sell during such calendar year to non-integrated wholesalers, non-integrated converters and other non-integrated purchasers located in the eleven Western state area (meaning in each case purchasers who are not engaged, nor to the knowledge of Respondent controlled by others engaged, in such area, in the manufacture of paper of a type and grade similar to that manufactured at such mill of the Respondent), a number of tons of paper equal to 40@ ef the tons of paper expected to be produced at such mill during the calendar year, pro- INTERNATIONAL PAPER CO. 1201 1192 Decision vided, that if a lesser amount of such paper is so contracted to be sold prior to the commencement of such calendar year, then a number of tons of paper equal to the balance of such 40% shall be made available by the Respondent to non-integrated purchasers of the character described above who thereafter make written request to purchase any part thereof during such calendar year to the extent and subject to the terms set forth below: 1. The number of tons included in such balance shall be reduced at the end of each month during such calendar year by the number of tons for which contracts of sale are made during such month, or by an amount equal to one-twelfth of the original balance, whichever is greater;

2. All contracts of sale shall be subject to Respondent’s standard credit requirements, shall be at Respondent’s standard prices, and on its standard terms and conditions, in such area, and in weights, finishes and roll widths regularly made at such mill. No such contract need call for deliveries at a rate disproportionate to the uncontracted for expected production of paper at such mill during the balance of such year.

It is understood, That not all the paper and paperboard to be supplied to non-integrated buyers under this order need be produced at Respondent’s Pacific Coast mill, but shall be paper and paperboard of similar types and grades.

It is further understood, That the number of tons of paper and the number of tons of paperboard expected to be produced during a calendar year at such mill shall be determined for purposes of this order by a bona fide estimate by the Respondent until one full calendar year has elapsed after the commencement of commercial operations at such mill, and thereafter shall be deemed to be the number of tons of paper and the number of tons of paperboard that were produced during the immediately preceding calendar year at such mill.

Jurisdiction is retained so that Respondent may at any time hereafter petition the Commission for construction or modification of this order, which the Commission will consider and, upon proper showing by Respondent, allow to the extent it finds such construction or modification to be warranted and consistent with § 7 of the Clayton Act.

- DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission’s Rules of Practice, the initial decision of the hearing examiner shall, on the 25th day Decision 53 F.T.C.

of June, 1957, become the decision of the Commission; and, accordingly:

It is ordered, That Respondent International Paper Company, a corporation, shall, within sixty (60) days after service upon it of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with the order to divest and to cease and desist. APOLLO CO., INC., ET AL. 1203 Decision