Sergeant & Nicholoy, Inc.

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IN THE :MATTER OF SERGEANT & NICHOLOY, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2 ( C) OF THE CLAYTON ACT Docl~et 8364. Complaint, Apr. 11, 19G1-Decision, Sept. 21 1961 Consent order requiring a corporate broker of canned and other food products a corporate food wholesaler, and the individual controlling both, to cease accepting illegal brokerage payments from sellers on purchases by said broker for the account of said wholesaler, which amounted to the \wholesaler s receiving brokerage on its own purchases for resale. CO1\IPLAIKT The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof, and hereinafter more particularly described, have been and are 110"- vjoInting the provisions of subsection (c) of Section :2 of the Clayton Act, as amended (D. Title 15, Section 13), hereby issues its complaint, stating its c.charges with respect thereto as follmys PAHAGHAPH. 1. Respondent Sergeant & Nicholoy, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of ,Visconsin, with its 01lice Hnd prineipnl place of business located at ?~. 50th 137-1:0 ,Yest Silver Spring Road, Butler "\Visconsin, with mailing address as Post OHice Box 702, Butler ,Visconsin.

Hesponclent Little Farmer I-tooc1s, Inc. is a corporation organized existing and doing business under and by virtue of the. )~n\"s of th~ State of ,Visconsln itll its ofhee and principal place of business located at the sallIe address as that of respondent Sergeant 8: Nicholoy, Inc. Respondent Little Farmer Foods, Inc.. also hns as its mailing address Post Otriee Bo~jOQ, Butler, ,V iseonsin. Respondent Robert C. Engle is an individual and is President of respondent Sergeant & Nicholoy, Inc. and is Se.c.retary and Treasurer of respondent Little Farmer Foods, Inc. Said individual respondent has the same business and mailing addressns that of the corporate respondents. Respondent Robert C. Engle is also principal stockholder of both corporate responde.nts and at all times hereinafter mentioned ha.s formulated, directed nnd c.ontrolJe.c1, and now formulates, directs and controls the policies, acts and practices of said corporate respondents, including the acts and practices hereinafter mentioned. Respondent Hobert C. Engle and both corporate respondents are hereinafter sometimes collectively referred to ns respondents.

&. &.

SERGEANT & NICHOLOY, INC. , ET AL. 561 560 Complaint PAR. 2. Respondent Sergeant & Nicholoy, Inc. is engaged in business primarily as a broker representing various principals in the sale and distribution of canned goods and other food products, hereinafter referred to as food products. In representing these principals said respondent is paid a brokerage fee or commission at varying rntes of from 3 percent to 5 percent, depending upon the product sold. The volume of business done by respondent Sergeant ~icholoy, Inc. is substantial.

respondent Little Farmer Foods, Inc. is engaged in business primarily as a wholesale distributor or jobber, buying, selling and distributing food products. Said respondent purchases its food products from a large number of suppliers located in many sections of the Linited States and its volume of business in the purchase and sale of food products is substantial. On a substantial part of the purchases of food products made by respondent Little l~"' armer Foods, Inc., respondent Sergeant & Nicholoy, Inc. acts as broker. Such transactions like,yise represent a substantial part of the broker'nge business of respondent Sergeant Nicholoy, Inc.

\R. 3. Respondent Sergeant &. Nicholoy, Inc" in the. course and conduct of its business, as aforesaid, has bpen and is now selling and distributing food products, in commerce, as ': comn1E'rce. '~ is defined in the aforesaid Clayton Act, as amended, for its pl'incipnls located in various states of the United States other than the State of ,Yisconsin in 'Thich respondent is located. Said respondent has transported or c~used1 saiel food products, when sold, to be transported from it. principals~ places of business to the buyers' places of business locn ted in other states, or to their customers located therein, including shipme.nts to respondent Little Farmer Foods, Inc. Thus, there hns been at. all times mentioned herein a continuous course of trade in commerce in the sale of said food products across state lines between,n respondent and its principals, or customers thereof. Respondent Little Farmer Foods, Inc., in the course and conduct of its business, ns aforesaid, has been and is now purchasing, selling and distributing food products, in commerce, as "commerce" is defu1ed in the aforesaid Clayton Act, as amended, in that said respondent purchases food products from suppliers or sellers located in several states of the. Unite.d States other than the State of ""\Visconsin, in whjch respondent is located. Respondent transports, or causes such food products~ 'Then purchased, to be trnl1sported from the pInel's of business of its suppliers to respondent who is 'loe-ated in the. State of ""\Visconsin or to respondent's customers lacnt.ed in said state or eJse.,,"here, including: purc.hases mncle through the brokerage firm of respondent Sergeant &; Nicholay, Inc. Thus, there hns been fit all times mentioned herein n continuous course of trade. in commerce in the purchase. of food prod- 698-490--G4---- &; .

Decision 59 F.

ucts across state lines between respondent and its suppliers, and in the sale of food products across state lines between respondent and its customers.

PAR. 4. In the course and conduct of its business in commerce, and more particularly since January 1 , 1959, respondent Little Farmer Foods, Inc. has been and is now making numerous and substantial purchases of food products for its own account for resale from suppliers who utilize the services of respondent Sergeant & Nicholoy~ Inc. as an intermediary or broker. On many of these transactions said respondent Sergeant Nicholoy, Inc. is paid or allowed a brokerage or commission by the seller. In view of the ownership and control exercised by respondent Robert C. Engle over both corporate respondents as hereinafter alleged and described, said respondent Sergeant & Nicholoy, on such transactions, is acting for and in behalf, or is subject to the direct or indirect control of respondent Little Farmer Foods Inc., or the individual respondent Robert C. Engle, or both. This would, in effect, be the equivalent of respondent Little Farmer Foods Inc. receiving a brokerage or commission on its own purchases. PAR. 5. The ads and practices of respondents in receiving a brokerage or comniission, or an allowance or discount in lieu thereof, 011 their mvn purchases, either directly or through a brokerage company owned and controlled by individual respondent Robert C. Engle, as above alleged and described, are in violation of subsection (c) of Section 2 of the Clayton Act, as nmendec1 (U. C. Title 15, Section 13). ilness1'S, Oecl ~l G. .liiles nnd Basil J. Jiezl-Jws for the Commission. ul'lingam. , Gibbs (0 Roper: by JIJ'. Richo"J'd S. (limbs ~Iihnlllkee ,Vis., for respondents.

INITL\L DECISION BY RAY:;\IOND J. LYKCH, I-learing EX.BIIXEH The complaint in this proceeding, issued ~\april 17 , 1961 , charges the above-named respondents "itb violation of the provisions of subsection (c) of Section 2 of the Clayton Act, as amended. On July 31 , 1961, there was submitted to the undersigned hearing examiner an agreement between respondents and counsel supporting the eOml)laint prm-iding for the entry of a consent order. Under the foregoing agreement, the respondents admit the :jurisdictional facts n alleged in the complaint. The parties agree, nmoJlg' other things, that. the cease and desist. order there. set forth mav be enter' ecl without further notice find have the same force and eH'eet as if entered after n full hearing and the doenment includes a waiyel' by the respondents of all rights to challenge or contest the validity of the order issuing in accon1ance therewith. The agreement further l'ccii es that. it is for settlelnent purposes only and does not constitute an ac1- &; , ,, SERGEANT & NICHOLOY , 11\C. , ET AL. 563 560 Order mission by the respondents that they have violated the 1..1,'\'\ as a.Begeel in the complaint., and that the comphint may be used in construing the terms of the order.

The hearing examiner finds that the content of the agreement meets all oJ the requirements of Section 3. 25 (b) of the llnles of the Commission.

The hearino' examiner havin!.1" considered the n. agreement and )1'0posed order, and being of the opinion that they provide an appropriate c) basis for settlement and disposition of this proceeding, the. agreement is hereby nc.ce.pted, and it is ordered.d that. said agreement shall not become a part of the official record unless and until it. becomes a part of the decision of the Commission. The following jurisdictional findings are made and the following order issue/I. 1. Respondents Sergennt 8: Nicholoy, Inc. and Litt Ie Farmer Foods Inc.. fire c.orporntions existing and doing business under and by virtue of the In,vs of the State of ,Visconsin ith their oftlces and principal place of business located at N. 5G 13740 ,Yest Silver Spring Road, in the City of Butler, State of ,Visconsin, with mailing acldre:::s as Post Oflic.e Box 702, 13utler, ,Visconsin, Respondent Robert C. Engle is n.n indiyiclnal ~mc1 is an officer both the above-named respondent corporahons, with his office and principal place of bl1siness the same as that of respondent corporations. 2. The Federal Trade Commission has :jurisdiction of the subject matter of this proceeding and of the respondents. Order I t is O1'(lered That respondents Sergennt & Nicholoy, Inc., a corporation, nnd its officers, and Robert C. Engle, Indi \"idually and as an officer of Sergeant Nicholoy, Inc., and respondents' agents, representatives an(l employe. , directly or through any corporate, partnership, sole proprietorship, or other device, in connection ,,-ith the purchase or sale. of canned goods or other food products, in commerce, as "comnance" is defined in the aforesaid Clayton _-tcl do forthwith cease and desist from:

Hece-jying 01' Hecepting, directly or indirectly, from any seller, anything: of va,ll1e ns fl commission, brokerage, or other compensnt.ion, or any allowance or discount in lieu thereof, upon or in connection with any purchase oJ canned goods or other food products for their own nceonnt, 01' for the account of Little Farmer Foods, Inc., or any other buying' organization, where, and so long as, any relationship exists between the brokerage organizfltion and the buying organization either through 0'ynership, control, or l11nnngement by the individual respondent Hobert C. Engle, 01' :l11Y other party, or ,,-here respondent ,, Syllabus 50 P.

Se.rge.ant &; Nicholoy, Inc., or respondent Robert C. Engle, individually or as an officer of Se.rgennt &, Nicholoy, Inc., is the. agent, representntive, or intermediary acting for or in behalf, or is subject to the direct or indirect control of any bu:ver, including Little Farmer Foods Inc.

It is Iwrtl1er ordered That respondents Little Farmer Foods, Inc., a corporation, and its officers, and R.robert C. Engle, individually and as nn officer of Little Farmer Foods, Inc., and respondents' agents, representatives and employees, directly or through any corporate, pnrtnership, sole proprietorship, or other device, in connection with the purchase of cnnned goods or other food products, in commerce . as commerce" is defined in the aforesaid Clayton Act, do forthwith tense and desist from:

R.eceiving 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 canned goods or other food products for their own Recount, or on purchases made through the brokerage firm of Sergeant & Nieholoy, Inc., or any other brokerage organization, where and so long as, nny rehtionship exists bet,,"een the brokerage. organization and the. buying organization either through o,,'nership, control, or management by the individual respondent Robert C. Engle, or any other party.

DECISION OF THE COi\DIISSION AXD ORDER TO FILE REPORT OF CO)IPLL\XCE 21 of the Commissioll s Rules of Practice Pursuant to Section 3. the initial decision of the hearing examiner slwll on the 21st cb:" of September 1961 , become the decision of the Commission; find, nccorc1ingly :

herein shnll, ,within sixty (60) It -is ordered That the respondents clays after service upon them of this order, file. ,,-ith the Commission a. re.port in writing setting forth in detail the manner find form in