Keystone Wire Cloth Company

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IN THE MATTER OF KEYSTONE WIRE CLOTH COMPANY, ET AL.

CONSENT ORDER, ETC.. IN REGARD TO THE ALLEGED VIOLATLOK OF SEC. 2 (c) OF Tire CLAYTON ACT Docket 72.97. Complaint, Nov. 1!J58-Dec' ision, Apr. , 195.9 Consent order requiring a manufacturer of wire cloth with principal place of business in Hanover, Pa., to cease violating' Sec. 2(c) of the Clayton Act by paying- commissions on sales to the broker who was president and treasurer of the corporate buyer and, with those related to him, owned mor than 99% of its common stock; and requiring said buyer and said broker president to cease accepting' any brokerage or allowance in lieu thereof in connection with such purchases. COMPLAIKT The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof, and hereinafter more particularly described, have violated and are now violating the provisions of subsection (c) of Section 2 of the Clayton Act (D. , Title 15 , Sec. 13), as amended by the Robinson-Patman Act, approved June 19, 1936, hereby issues its complaint, stating its charges with respect thereto as follows: PARAGRAPH 1. Respondent Keystone Wire Cloth Company, hereinafter sometimes referred to as the seller respondent, is a corporation, organized, existing and doing business under and by virtue of the laws of the State of Pennsylvania, with its principal offce and place of business located at Hanover, Pa. Said respondent is now, and for some time last past has been, engaged in the business of manufacturing, selling and distributing wire cloth, including insect wire screening, with annual gross sales amounting to approximately $3,500,000.

PAR. 2. Respondent Sherwatt Equipment & Manufacturing Co., Inc. , hereinafter sometimes referred to as the buyer respondent, is a corporation, organized, existing and doing business under and by virtue of the laws of the State of New York, with its principal offce and place of business located at 47 Murray Street, New York, 7, N.

Respondent Arthur Watts is president and treasurer of said corporation and directs, formulates and controls its policies, acts and practices. It is now, and for sometime last past has been engaged in the business of both manufacturing wire cloth and in Complaint 55 F.

buying and reselling wire cloth manufactured by others. Its annual gTOSS sales amount to approximately $500,000. PAR. 3. Respondent Arthur Watts, hereinafter sometimes referred to as the broker respondent, is an individual, and is a member of the board of directors and president and treasurer of buyer respondent, owning individually more than 50% of all classes of its stock outstanding and in conjunction with those related to him more than 99 of the common stock and 90 (k of the preferred stock outstanding. He occupies the same business premises as does the buyer respondent, and acts for and in its behalf in its business dealings. He also acts as broker, agent, or representative for the seller respondent herein in the sale of its wire cloth, his commissions or compensation on sales ranging from to 4j/( thereof. His business address is 47 Murray Street, New York 7, i\.

PAR. 4. In the course and conduct of its business the seller respondent makes substantial sales of its products through the broker respondent to thc buyer respondent. On such sales and ourchases the broker respondent has been and is now receiving or accepting something of value as a commission, brokerage, or other compensation from the seller respondent, whith receipt or acceptance has the same effect as if the buyer respondent had received or accepted such compensatitm, or an allowance or discount in lieu thereof, and in turn distributed it to the broker respondent.

PAR. 5. Said respondents, directly or indirectly, cause such products, when sold and purchased, to be transported from the state of origin to destinations in another state. There has been at all Urnes mentioned herein a continuous course of trade in commerce, as "commerce" is defined in the Clayton Act, in such pruducts between said respondents.

PAR. 6. The acts and practices of respondents as alleged herein are in violation of subsection (c) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act. M1' RTockman HOTne for the Commission. Lamb LOrlg, by . Geo,.ge P. Lamb of Washington, D. for Keystone Wire Cloth Company.

Po!che,' , Schlussel Katcher by M,-. Munroe F. Po!che,. New York, N. , for Sherwatt Equipment & Manufacturing Company, Inc., and Arthur Watts.

KEYSTmm WIRE CLOTH CO., ET AI,. 1635 1633 Decision INITIAL DECISION BY FRANK HIER, HEARING EXAMI:-ER Pursuant to the provisions of subsection (c) of Section 2 of the Clayton Act (U. , Title 15 , Sec. 13), as amended the Robinson-Patman Act, the Federal Trade Commission on November 6, 1958, issued and subsequently served itg complaint in this proceeding against the above-named respondents. On Fehruary 20, J 959, there was submitted to the undersigned hearing examiner an agreement between respondents and counsel supporting the complaint providing for the entry of a consent order. By the terms of said agreement, respondents admit all the jurisdictional facts alleged in the complaint and agree that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations. By such agreement, respondents waive any further procedural steps before the hearing examiner and the Commission; waive the making of findings of fact and conclusions of law; and waive all of the rights they may have to challenge or contest the validity of the order to cease and desist entered in accordance with this agreement.

Such agreement further provides that it disposcs of a1l of this proceeding as to all parties; that the record on which this initial decision and the decision of the Commission shall be based shall consist solely of the complaint and this agreement; that the latter shall not become a part of the offcial record unless and until it becomes a part of the decision of the Commission; that the agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint; and that the following order to cease and desist may be entered in this proceeding by the Commission without further notice to respondents, and, when so entered, it 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; and that the complaint may be used in construing the terms of the order. The hearing examiner having considered the agreement and proposed order, and being of the opinion that they provide an appropriate basis for settlement and disposition of this proceeding, the agreement is hereby accepted, the following jurisdictional findings made, and the following order issued. 1. Respondent Keystone Wire Cloth Company is a corporation existing and doing business under and by virtue of the laws of 1636 FEDERAL TRADE COML!ISSION DECISIONS Order 55 F.

the State of Pennsylvania, with its offce and principal place of business located at Hanover, Pa.

Respondent Shcrwatt Equipment & Manufacturing Company, Inc., is a corporation existing and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of business located at 47 Murray Street, New York, N.

Respondent Arthur Watts is an individual and is president and treasurer of said Sherwatt Equipment and Manufacturing Company, Inc. He directs, formulates and controls its policies, acts and practices. His business address is 47 Murray Street "ew York, N.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents. ORDER It is ordcTed That respondent Keystone Wire Cloth Company, a corporation, and its offcers, directors, representatives, ag-ents or employees, directly or indirectly, or through any corporate or other device, in connection with the sale of wire cloth in commerce, as "commerce" is defined in the Clayton Act, do forthwith cease and desist from:

Paying, granting, or allo\ving, 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, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, upon 01' in connection with any sale of its wire cloth to such buyer. It is further ordered That the respondent Shcrwatt Equipment & Manufacturing Company, Inc. , a corporation, and its officers, and Arthur Watts, individually and as an offcer of said corporation, and respondents ' agents, representatives, and employees, directly or indirectly, or through any corporate or other device, in connection with the purchase or sale of wire cloth in commerce, as "commerce" is defined in the Clayton Act, do forthwith cease and desist from:

Heceiving or accepting, directly or indirectly, from any seller anything of value as a commission, brokerage or other compensation, or any allowance or discount in lieu thereof, upon or in connection with any purchase of wire cloth by or for the account of respondent Shel'watt Equipment & Manufacturing Company, Inc., or upon any other purchase or sale where either respondents 1633 Dccision Sherwatt Equipment & Manufacturing Company, Inc., or Arthur Watts, or both, are the agents, representatives, or other intermediaries acting for or in behalf of, or subject to the direct or indirect control of, the buyer.

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 9th day of April 1959, become the decision of the Commission; and, accordingly:

It is ordered That the respondents herein 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.

Decision 55 F.