Helen E. Hinde

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IN THE :vATTER OF HELEN E. HINDE ET AL.

TRADING AS PUGET SOUND BROKERAGE CO. ORDER, ETC., I:- REGARD TO THE ALLEGED VIOLATION OF SEC. 2(c) OF THE CLAYTON ACT Docket 7151. Complaint, May 20, 1958-Dects'i- , Peb. , 1.9.9 Order requiring primary brokers of seafood products in Seattle, Wash. , to cease violating the brokerage section of the Clayton Act (Sec. 2(c)), by granting to certain buyers of canned salmon, deduction1S from price by way of allowances or rebates, a part or all of which was not charged back to their packcr-principals, in such transactions as invoicing buyers, including buying agents of food chains, at a lower price per case than they accounted for to the packer-principals and absorbjng the difference out of their brokerage; granting a 10c a case promotional allowance to the purchaser in the form of a freight rebate; and taking 370 brokerage instead of 5'7 on sales involving price concessions to certain buyers. NIr. Cecil G. NIiles for the Commission. Evans, McLaren, Lane, Powell Eeeles by NI1' W. By,'on Lane and NIr. NIartin P. Detels, Jr. of Seattle, Wash., for respondents. INITIAL DECISION BY ABNER E. LIPSCOMB, HEARING EXAMINER The Complaint On May 20, 1958, the Commission issued its complaint against Helen E. Hinde and Elizabeth B. Swenson, individually and as copartners trading as Pug-et Sound Brokerage Co. charging them with acts and practices violating S2 (c) of the Clayton Act as amended (U. S. Title 15, 913). The complaint alleges that the respondents are now, and for the past several years have been engaged in a course of trade in commerce, as "commerce" is defined in the Clayton Act, as amended. The complaint avers that in that course of trade respondents act as primary brokers for various packers of seafood products, including canned salmon which respondents sell and distribute for their packer-principals by negotiating- sales through field brokers located in various marketing areas to buyers located throughout the United States. The complaint further alleges that respondents are usually compensated for such services by deducting a brokerage or commission of 5 ft. of the net selling price of the commodity sold. It is further alleged that respondents compensate their field brokers PUGET SOUND BHOKERAGE CO. 1243 1242 Decision by paying them a brokerage or commission of 2% % of the net sellng price of the merchandise. It is charged that respondents have granted allowances, differentials, rebates and concessions in prke, in substantial amounts, to certain buyers of said seafood products, a part or all of which was not charged back to the various packer-principals, but was taken from the brokerage or commission earnings of respondents and their field brokers. Specifically, the complaint alleges that respondents' methods of effectuating such concessions included:

(a) Sellng to certain buyers at net prices which were less than those accounted for to their packer-principals; (b) Granting to certain buyers deductions from price by way of allowances or rebates, a part or al1 of which were not charged back to their packer-principals;

(c) Taking reduced brokerage on sales which involved price concessions to certain buyers.

The complaint alleges, finally, that such acts and practices of the respondents constitute the alleged violations of 2 (c) of the Clayton Act as amended.

The Answer On August 6, 1958, respondents submitted their answer to the above-described c01l1plaint, admitting their identity and business organization and that they are engaged, as alleged, in the business of acting as primary brokers for seafood packers. They deny, however, the possession of suffcient knowledge to answer the allegations regarding the granting of allowances, differentials, concessions in price or rebates in lieu of brokerage by the methods alleged, or that such acts and practices are in violation of law.

The Proceedings Following the joining of the issues by the complaint and answer thereto, a hearing was held in Seattc, Wash., on August , J 958 , at which counsel supporting the complaint presented evidence and restcd his case. The respondents then declined to present any evidence. Thereafter, both counsel submitted to the hearing examiner proposed findings as to the facts and proposed conclusions. The entire record herein, including such proposals has been duly considered. Each of such proposals which has been accepted has been, in substance, incorporated into this initial decision. All proposals not so incorporated are hereby rejected.

Decision 55 F.

Identity and Business of Respondents Respondents' identity, business organization and general operation, as hereinabove described, have been admitted and are found to be as alleged.

Acts and Practices Questioned The evidence shows that on August 17, 1952, respondents sold 10 cases of 48 tall one-pound cans each of Chum salmon to Winsboro Wholesale, Winsboro, La. , at $19. 00 per case. In accounting for this sale to their packer-principal, the Annette Island Canning Company, Metlakatta, Alaska, respondents represented this salmon as having been s01d to the buyer at $20. 00 per case. Respondent Hindc testified that the difference between the invoice price to the purchaser and the price as accounted for to respondents' packer-principal was absorbed by respondents out of their brokerage; accordingly, $1.00 pcr case of respondents brokerage earnings on this transaction was passed on by them to the purchaser in the form of a lower price. On September 14 and 18, 1953, respondents invoiced Bridgeport Canfish Co. , the buying agent of Safeway, for 315 cartons of pink salmon at $17. 75 per case, but in accounting for this sale to the packer-principal1, Annette Island Canning Co., respondents indicated that the price charged the purchaser was 818. 00 per case. Testimony shows that this 25('-per-case difference was absorbed by respondents out of their 5 brokerage. Thus in this instance, respondents passed on to their buyer a portion of their earned brokerage on this transaction in the form of a 25(-pcrease price concession.

Similarly, respondents on December 3, 1956 , invoiced to American Stores, Philadc1phia, Pa. , 200 cartons of 48 1-pound cans of Chum salmon at $20. 50 per case, but accounted to their packerprincipal, the Annette Island Canning Company, that this sale was made at $21.00 per case, the difference of 50\' per case being absorbed by respondents out of their brokerage. In another instance, respondents on January 23, 1957 , invoiced the American Stores Co. , Philadelphia, Pa. , for 500 cartons of 48 tall I-pound cans of pink salmon at $22. 50 per carton, accounting for this sale to the packer-principal, the Annette Island CRlming Company, as if made at the price of $23. 00 per carton, the 50( difference again being absorbed by respondents out of their brokerage.

PUGET SOUND BROKERAGE CO. 1245 1242 Decision Again, on February 18 , 1957 , respondents invoiced the same customer, among other things, for 500 cartons of 48 tall I-pound cans of pink salmon at $22. 50 per case, and accounted for the sale to the same packer-principal at $23. 00 per case, absorbing out of their brokerage, and passing on to the customer as a price concession, the difference of 50( per case. In view of the above-described evidence, we must find that respondents have, in fact, engaged in " selling to certain buyers at net prices which were less than those accounted for to their packer-principals " as alleged in the complaint herein. The record contains an invoice dated September 30, 1952, covering a sale by respondents of 1 250 cases of 48 tall I-pound cans of pink salmon to the C. F. Smith Company, Detroit, Mich. This invoice shows freight prepaid by respondents in the amount of 168. , whereas the freight actually paid by respondents to the Union Pacific Railroad for this shipment was $1 293. 17, or $125 more, which reprcscnt8 J O : a case promotional allmvance granted to the purchaser in the form of a freight rebate. This further evidence compels the factual conclusion that the respondents have, as alleged, granted "to certain buyers deductions from price by ray of allowances or rebates, a payt or a1l of which were not charged back to their packer-principals. On :\lareh 16 , 1953, respondents invoiced Chum salmon to a customer in Louisiana through Bro\vn Brokerage Co. , respondents' field broker, at $1(i. OO per case, on which transaction respondents received 5j'(; brokerage from their packer-principal, Annette Island Canning Co. On the "erne elate, respondents invoiced Chum salmon to The Nakat Packing Corp. , a buying sub- , at $15. 25 persidiary of the Great Atlantic & Pacific Tea Co. case, 750 less per case than the price charged the Louisiana customer. On this transaction, the respondents received a billing and handling charge of 200 per case from Nakat, in lieu of their usual 5 % brokerage.

As shown by documentary evidence in the record, respondents had with the N akat Packing Corp. a sales contract dated September 14 , 1953 , which specified that a 500-per-case differential in favor of Nakat was to be maintained on a1l items listed therein; and on a1l sales to Kakat, respondents received from their packer- , only Ie, broker- principal, the Kla\vack Oceanside Packing Co. age instead of th( ir usual )r;. Instances thereof are substantiated in the recorel by invoices dateel November 18, 1953, and February 16 , 1954 , respectively. Simultaneously, respondents j!, Decision 55 F.

were selling the same produci to other customers through their field brokers at 509 a case over their price to Nakat, and were receiving from their packer-principals brokerage of 5%. In fact the same packer- principal who paid respondents 3 brokerage on sales to Nakat paid to them, during the same period of time 5 % brokerage on similar sales to other customers. Under the terms of the above-mentioned contract with N akat, the packer agreed "that the present ratio of 509 a case" (aJlowancc to Nakat) "shall be maintained against a general market decline on aJl items listed'" * * " Respondent Hinde, on the record, explained that the packer reduced both the price to Nakat and the brokerage to respondents as they probably considered that it was not too diffcult to make the sale. These acts of the respondents reveal that, as alleged, they have engaged in "htking reduced brokerage on sales which involve price concessions to certain buyers.

Applicable Precedents The courts have consistently held that it is a violation of 2 (c) of the Clayton Act to payor to pass on brokerage to a buyer in any guise whatsoever.

In The Great Atlantic Pacific Tea Company case, 106 F. 2cl 667 , 674 (C. A. 3, 1939), cert. denied 308 U.S. 625 (1940), the Court said:

At each tage of its enactment, paragraph (c) was declared to be an absolute prohibition of the payment of brokerage to buyers or buyers' representatives or agents. Such is the plain intent of Congress and thl1S we construe the statute. Any oth(Cr result would frustrate the intent of Congress. Also in Oliver ETas., Inc. , et al. v. Federal Trade Commission 102 F. 2d 763, 770 (C. A. , 1939), the Court said: No onc would contend that ,,, without violating this section, a broker representing' the seller could give his commissions to the buyer; for in such case the action of the broker would be the action of the principal, the seller, and would amount to the allowance of commissions by the seller to the other party to the transaction in direct violation of the statutory provisions. Further, in quality Eakers of Am,eric(/ v. Fede'/al T-trade COnlmission 114 F. 2d 393 (C. A. , 1940), the Court said: It is plain enough that the paragraph 12(c)J taken as a \vhole, is framed to prohibit the payment of brokerage in any guise by one party to the other or the other s agent"' * * j () ;;; PUGET SOUND BROKERAGE CO. 1247 1242 Decision Conclusions We must conclude, in the light of the authorities cited, and the facts as hereinabove found, that respondents, as a1Jeged in the complaint, granted, directly and indirectly, price concessions rebates and a1Jowances in lieu of brokerage to certain buyers of seafood products, in violation of 2(c) of the Clayton Act as amended by the RobinsoJl-Patman Act. Accordingly, It is ordered That respondents Helen E. Hinde and EJizabeth B. Swenson, individually and as copartners trading as Puget Sound Brokerage Co. , and their agents, representatives and employees, directly or through any corporate, partnership, or other device, or trading under any other name, in connection with the sale of seafood products in commerce, as 'jcommerce" is defined in the Clayton Act, do forthwith cease and desist from: Paying, granting, or passing 011, either directly or indirectly. to any buyer, or to anyone acting for or in behalf of, or who is subject to the direct or indirect control of such buyer, brokerage earned or received by respondents on sales made for their packerprincipals, by allowing to buyers lower prices which reflect alj or any part of such brokerage, or by granting them al10wanccs or rebates in lieu of such brokerage, or by any other methods or means.

DECISION OF THE COMMISSION AKD ORDER TO FILE REPORT OF COMPLIA The Commission having considered the hearing examiner initial decision, fied December 9 , 1958 , in disposition of this matter; and It appearing that except for one sentence, which is inaccurate said initial decision is appropriate in alj respects to dispose of the proceeding:

It is o?'le?'ed That the initial decision be, and it hereby is modified by striking therefrom the last sentence of the first paragraph on page 3 , reading as fo1Jows:

This transaction shows that the respondents divided the 5 brokerage which they were legally eJltitled to colJcct from their packer-principal in hau, and granted a price concession representing 21/:; thereof to their customer taining only 21/2 brokerage as compensation for their services. It is iUTthe?' OJ'dered That said initial decision as so modified , and it hereby is, adopted as the decision of the Commission. Decision 55 F.

It is further ordered That the respondents, Helen E. Hinde and Elizabeth B. Swenson, shall, within sixty (60) days after service upon them of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with the order to cease and desist contained in the aforesaid initial decision. GREENWOOD FURS, INC., ET AI,. 1249 Decision