Erie Sand and Gravel Company

Text (OCR of the scan at left; may contain errors)

IN THE IVI.Alter OF E1UE SAKD A:ND GRAVEL COMPANY ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF SEC. 7 OF THE CLA YTOX ACT Docket G6"/,0. Complaint, Oct. 30, 1D,jG O/"der, Jan, 4, 1962 Order clisrnissing following the Third Circuit' s Tacating of the Commission order of divestiture (56 F. C. 437) and remand of the case for further consideration (291 F. 2d 27D) ('complaint charging ilegal acquisition of competitor.

ORDER DJSMISSIXG CO::IPLAIXT The Commission having placed this matter on its mtn docket. for reconsideration in the light of t.he opinion of the United States Court of Appeals for the Third Circuit vacating the order of divestiture (-:entered by the Commission October 26, 1958, and remanding the cause to the Commission for such purpose; and It appearing in the light of additional information obtained by the Commission t.hat respondent no longe,r retains lly substantial part of the assets of the company it acquired which formed the. basis for this proceeding; and The Commission having determined that the case is now in essence moot and that, in the circumstances, it ,,-auld not be in the public interest to t.ake any furt.her action in the matter: It is ordered That the complaint in this proceeding be, and it hereby , dismissed.

Ix THE lVL\TTER OF AUTOMOTIVE .JOBI3ERS , I:NC., ET AL.

ORDER, ETC. : IN REGARD TO THE ALLEGED VJOL\TJOX OF SEC. :2 (f) OF THE CLAYTON ACT Docket 7590. Complaint, Scpt, 1959 Decision Jan. :1, 1962 Order rt.'quiring a Texas association of jobbers of automo;ive products and supplies wbicb \vas simply a bookkeeping de\-ice and served as agent through which members were bmed and made settlement for pUJ"cllases and its 19 members, to cease Tiolating Sec. 2(f) of the Clayton Act by inducing and receiving from suppliers \vhat they kne\T were "discriminatory and ilegal prices, discounts, allo\\-ances and rebates " resulting from their combined bargaining power and not ayai1able to their competitors. FEDERAL TRADE COl\IMISSIO:\ DECISIONS Complaint 60 F.

CO:iIPLAJXT The Federal Tra,de Commission, having reason to believe that the party respondents named in the caption hereof, and hereinaHer more particularly designated and described, hrLve violated and are no\\ violating the provisions of sub-section (f) of Section 2 of the Clryton Act, as nnwnc1ec1 by the Hobinson-Patman Act, approved June 19 1936 (li, Title 15, Sec. 13), hereby issues its complaint statillg its charges 'Ivith respect t.hereto as follo\\s: \lUGRAPI-I 1. Hesponclent Automotive .Tobbers, Inc. , hereinafter sometimes re,ferred to as respondent AJI, is fl corporation organized existing, fLnclcloing business under and by virtue of the laws of the State of Texas "\\ith its principal offce flnd place of business located at 2050 In-ing Boulevard, Dallas, Tex.

Respondent AJI, aHhough uti I izing corporal e form, is a membership organization, organized, Hwinta.ined, managed, controlled, and operatec1by and for its members. The m mbership of respondent JI is composed of corporations, partnerships, and individuals "hose business consists of the jobbing of autol1oti,-c products and supplies. Respondent AJI, as r.onstitutec1 and operated, is kno"\l1 and referred to in the trade as a buying group.

PAR. 2. The iollmying responclent corporations nnd indiyic1uals somet.times hereinafter rderred to as respondent jobbers, constitute respondent AJI:

Respondent )'lrs. e'- a Baker is a sale proprietor doing business under the firm mane and style 01 Baker Auto Supply, "irh her offce and principal pbce of business located at ETiJ)shoro, Tex. Respondent E. L. Bn uer is a sole proprietor doing business under the firm name. and style of B n1fr uto Supply, with his offce and principal pInCD of business located at 3000 ,Vest Lancaster Street Fort ,'f orth, Tex.

Hesponclent Blne Ribbon f\nto Supply, Inc., is a corporation organized existing flld doing business nnc1er and hy virtue. of the laws of the State of Oklahoma, ,with its principnJ offce and place of blbiness located at 1457 lye. 2:Jrc1 Street, Oklahoma City, Okla. Respondent II. B. Brade.n, J 1', is a sole proprietor doing business under the. flll1 name and style. of Brac1en L\utomotive, with his notice nn(l principal place of business locate(1 at 209 East, ::Inin St.reet, ,Vnxfllwchie, Tex.

respondents .J. ,Yo :Miichcll and ,V. L. Brown arc copartners (loing business under the iirm name and style of Brov"D Auto Supply, a AUTO:\1:0TIVE .JOBBERS INC. ET AL.

Complaint partnership with their offce and principal place of business located at 114 Avenue D, N.,V., Childress, Tex.

Respondent John nI. Carter is a sole proprietor doing business under the jjrm name and style of Carter Auto Supply, with his offce and principal place of business located at 2050 Irving Boulevard Dallas, Tex.

Respondent James Lacey is a sole proprietor doing business under the firm name and style of Central Grinding and Auto Supply with his offce and principal place of business located at 3710 Commerce Street, Dallas, Tex.

Respondent Thomas Clark is a sale proprietor doing business under the finn name and style of Clark Auto Parts Supply with his principal place of business located at Coleman, Tex. Respondent Halph Clark is a sole proprietor doing business under' the Jirm name and style of Ralph Clark Company with his principal place of business located at 218 East lain Street, Grand Prairie, Tex, Respondents C. E. Holcler and .f Y\T. Edgmon are copartners doing business under the firm name and style of Eclgmon-I-Iolder )Totor Supply, a partnership w.jth their office ,md principal place of business located at 1012 Scott Street, ,Vichita Falls, Tex. Respondent Euge,ne Straach is a sole proprietor doing business under the fii1Il name and style of Grove Auto Supply with his offce and principal place of business located at 7930 Lake June Road, Dallas Tex.

Respondent Rex Grove Auto Supply Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Texas, with its principal offce and place of business located at 4527 East Belknap Street, Fort ,Vorth, Tex. respondents :VI. R. "Walker, B. C. :McKinley and J. O. Thompson are copartners doing business under the firm name and style of Jobbers \Varehouse Service, a partnership, with their offce and principal place of business located at 217 North "Walnut Street, Shennan, Tex. Respondent Sam Mnrphy is a sole proprietor doing business under the firm name and style of Murphy Automotive Supply with his offce and principal place of business locatee! at 626 ,Vest Garland A venue, Garland, Tex.

Jlespondent L. E. Shafer is a sole proprietor doing business under the finn name and style of Senior Auto Paris with his offce and principal place of business located at 208 East Second Street, Odessa, Tex. Respondents Phil Crawford, O. J. Chase and R. R. Crawford are copartners doing business under the firm name and style of Texas 719-603--64-- Complaint 60 F.

Automotive Supply, a partnership, with their offce and principal place of business located at 3004 ,Vest Davis Street, Dallas, Tex. Respondent Vernon Pennington is a sale proprietor doing business under the firm 119.1118 and sty Ie of Vernon Parts Company \With his offce and principal place of business located at 1701 Marshall Street Vernon, Tex.

Respondent James E. "\Valkcr is a sale proprietor doing lmsines:i under the firm name and style of ,Valkel' Auto Parts with his offce and principal place of business located at 409 East Third Street Big Spring, Tex.

Hespondents Ethel ,Vaugh and Guy V. Cope are copartners doing business under the firm name and style of A. G. ,Vaugh Company, a partnership, with their offce and principal place of business located at 1392 Lubbock High"ny, Lamesa, Tex.

Respondent Madie E. 'V ood is a sole proprietor doing business under the firm name and style of ,Vood Tire & Supply Company with his offce and principal place of business located at Huntsville, Tex. PAR. 3. The respondent jobbers set forth in paragraph g have purchased and now purchase in commerce from suppliers engaged in commerce numerous automotive products and supplies for lise, consumption, or resale within the l7united States. Respondent jobbers and said suppliers cause the products and supplies so purchased to bc shipped and transported among and between the several states of the United States from the respective state or states of location of said suppliers to the respective different state or states of location of the said respondent jobbers.

PAR. 4. In the purchase and the resale of said automotive products and supplies, respondent jobbers ate in active competition with independent jobbers not affliated ,with respondent AJI; and the suppliers selling to respondent jobbers and to their independent jobber competitors are ill active competition with other suppliers of similar automotive products and supplies.

PAR. 5. Respondent AJ1, since its formation in 1954, has been and is now maintained, managed, controlled, and operated by and for the respondent jobbers set forth in Paragraph 1'\\0 and each said respondent, has participated in, approved, furthered, and cooperated with the other respondents in the carrying out of the procedures and activities hereinafter described.

In practice and effect, respondent A.JI has been and is now serving as the medium or instrumentality by, through, or in conjunction ,,,jth ,,,hieh said respondent jobbers exert the influence of their combined bargaining po,yer on the competitive suppliers hereinbefore described. AUTOMOTIVE JOBBERS , INC. ) E'I AL.

Complaint As a, part of their operating procedure tid respondent jobbers direct the attention of said suppliers to their aggregate purchasing power as a buying group and, by reason of such, have knowingly demanded and received, upon their individual purchases discriminatory prices discounts, allowances, rebates, and terms and conditions of sale. Suppliers not acceding to such demands arc usually replaced as sources of supply for the commodities concerned and such market is closed to them in favor of such suppliers as can be and arc indue-cd to afford the discriminatory prices, discounts, allowances, rebates, and terms and conditions of sale so demanded.

Respondents jobbers demand that those suppliers who sell their products pursuant to a quantity discount schedule shan consider their several purchases in the aggregate as if made by one purchaser and grant quantity discounts, allowances, or rebates on the resultant combined purchase volume in accordance with said suppliers' schedule. This procedure effects a discrimination in price on goods of like grade ancl quality between respondent jobbers and competing independent jobbers whose quantity discounts, allovm.nces, or rebates from such suppliers are based upon only their individual purchase volumes. From other suppliers the respondent jobbers demand the payment or allowance of trade discounts, allowances, or rebates which such suppliers do not ordinarily payor allow to jobber customers. This procedure effects a discrimination in price on goods of like gra,de and quality between respondent jobbers and competing indepeudent jobbers who are not afforded such trade disc01ilts, allowances, or rebates. vThen and if a demand is aececled to by a particular supplier, the subsequent purchase transactions between said supplier and the individual jobber respondents have been and are billed to, and paid for through, the aforesaid organizational device of respondent AJI. Said corporate organization thus purports to be the purchaser when in truth and in fact it has been and is now serving only as agent for the several respondent jobbers and a.s a mere bookkeeping device lor facilitating the inducement and receipt by the afore-described respondent jobbers of the price discriminations concerned. PAIL 6. Respondents have induced or received from their suppliers in the manner a.fore-clescribed, favorable prices, discounts, allowances rebates, terms and conditions of sale which they knew or should have known constituted discriminations in price prohibited by subsection (a) of Section 2 of the Clayton Act, as amended by the Robinson- Patman Act.

PAR. 7. The effect of the knowing inducement or receipt by respondents of the c1iseriminations in price as above alleged has been and FEDERAL TRADE COM IISSION DECTSIONS Initial Decision GO F. may be substantially to lessen, injure, destroy, or prevent competition between suppliers of automotive products and supplies and bet"\veen respondent jobbers and independent jobbers. PAR. 8. The foregoing alleged acts and practices of respondents in kno\vingly inducing or receiving discriminations in price prohibited by subsection (a) of Section 2 of the Clayton Ad, as amended by the nohinson-Patman Act, are in violation of subsection (f) of Section 2 of said Act.

3fT. Eldon P. Sch1'up and 3fT. John Party supporting ,the complaint.

G1C/'A: Heed il Clrci'k of Dallas, Tex., by Jli' Ram.sey Cla/'h' and 3fT. Willam L. Keller for respondents. INITIAL DECISION BY ED\V ARD CREEL, J-IEARIXG EXA::IlXER The Federal Trade Commission issued its complaint against the respondents herein, charging them with knowingly inducing or receiving discriminations in price prohibited by subsection (a) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act in violation of subsection (f) of Section 2 of said Act. This proceeding is before the hearing examiner for final consideration upon the complaint, answer, testilnony and other evidence, and proposed findings of fact and conclusions filed by counsel supporting the complaint. Consideration has been given to the proposed findings of fact and conclusions submitted by counsel supporting the complaint, and an proposed findings of fact and conclusions not hereinafter specifically found or concluded are rejected, and the hearing examiner, having considered the entire record herein, makes the following findings as to the iacts, conclusions drawn therefrom nncl order: FINDINGS AS TO THE FACTS 1. Respondent A lltornoti \'e Jobbers, Inc. (hereinafter.r sometimes referred to as respondent AJI), is a Texas corporation with its principal offce ancl pllwe of husincss located at 2050 Irving Boulevard Dallas, Tex.

2. Respondent A. , although using corporate form, is a Inembership organization, organized, maintainec1 ma,naged, controUed, and operated by and for its members. Tho membership of respondent AJI is composed of corporations, partnerships, firms flnd individuals whose business consists of the jobhing of automotive products and supplies. As constituted, respondent AJI is known and referred to in the tra.de as a buying group.

AUTOMOTIVE- .rOBBERS , L\TC. ET AL.

Inital Decision 3. At the time of issuance of the complaint in this proceecling for a substantial period of time since its organization, the members of respondent A.JI were as follows:

Hesponclent :;11'5. X eva Baker, a sale proprietor doing business under the :frm name and style of Baker Auto Supply, with her oflce and principal place of business located at Hillsboro, Tex. Hesponclent E. L. Bauer, a sale proprietor doing business under the firm name and style of Bauer Auto Supply, "ith his offce and princip,,1 place of business Joeated at 3000 INest Lancaster Street Forth 'Worth, Tex.

Hespolll1cnt Blue Rihbon Auto Sl1apply, Inc., fill Oklahoma corporation with its principal offce andp1ace of business Jocated at. 14,37 B. 23rd Street, Oklahoma City, Okla.

Respondent H. B. BrrLclen, J a so)e proprietor doing business under the firn1 name and style of Braden s Automotive, with his offce and principal place of business Jocated at 209 East :.lain Street 1Vaxahachie, Tex.

Respondents J. VV. "Iitchell and VV. L. Brown, copartners doing business under the firm llame and style of Brown Auto Supply, a partnership, with their omce and principal place of business Joeated at 114 A venue D vV. Childress, Tex.

Hcspondent Jolm 1. Cart.er, ft sale proprietor doing business under the firm nilme "nd style of Carter Auto Supply, with his offce and principal pl"ce of business located at 2050 Irving Boulevard, Danas Tex.

Respondent Thomas CJark, a sole proprietor doing business under the firm 11ame and style of Clark Auto Parts Supply with his offce and princi pal place of business located at Coleman, Tex. Respondent Halph Clark, a :;01e proprietor doing business under the firm name and style of Ralph Clark Company with his offce and principal place of business located at 218 East Main Street, Grand Prairie, T'ex.

Respondents C. E. Holder "nd M. IV. Edgmon, copartners doing business under the firm name and style of Edgmon-Holder yIotor Supply, "partnership, with their offce and principal place of business Jocaled at 1012 Scott Street, vVichita Falls, Tex. Respondent Eugene Straach, a sale proprietor doing business under the finn name and style of Grove Auto Supply with his oftice and principal place of business located at 7930 Lake June Road, Dallas Tex.

FE-DERAL TRADE COMMISSION DECTSIONS Initial Decision 60 F.

Respondent Rex Grove Auto Supply Company, Inc., a Texas corporation with its principal offce and place of business located at 4527 East Belknap Street, Fort worth, Tcx.

Respondents M. R. vValker, B. C. McKinley and J. O. Thompson copartners doing business under the firm name and style of Jobbers 1Varehollse Service, a partnership, with their offce and principal place of business located at 217 X arth 1Valnut Street, Sherman, Tex. Respondent Sam furphy, a sale proprietor doing business under the firm name and style of Murphy Automotive Supply with his of lice and principal place of business located at 626 1Vcst Garland Avenue Garland, Tcx.

Respondent L. E. Shafer, a some proprietor doing business under the firm name and style of Senior Auto Parts with his offce and principal place of business located at 208 East Second Street, Odessa, Tex. Respondents Phil Crawford, O. J. Chase and R. R. Crawford, copartners doing business under the firm name and style of Texas Automotive Supply, a partnership, with their offce and principal place of business located at 3004 west Davis Street, Dallas, Tcx. Respondent Vernon Pennington, a sale proprietor doing business under the firm name and style of Vernon Parts Company with his offce and principal place of business located at 1701 Marshall Street Vernon, Tex.

R.respondent James E. ",Valker', a sale proprietor doing business uncle, the firm name and style of vValker Auto Parts with his offce and principal place of business located at 409 East Third Street, Big Spring, Tex.

Respondents Ethel1Vaugh and Guy V. Copc, copartners doing business under the firm name and st.yle of A. G. "'Vaugh Company, a partnership, with offce and principal place of business located at 1392 Lubbock Highway, Lamesa, Tex.

Respondent Madie E. 1V ood, a sole proprietor doing business under the firm name and style of 1Vood Tire & Supply Company with his offce and principal place of business located at Huntsville, Tex. The respondent J ames Lacey, was the sole proprietor doing business under the firm name and style of Central Grinding and Auto Supply with his offce and principal place of business located at :0710 Commerce Street, Dallas, Tex. Shortly prior to the issuance of the complaint herein, this respondent was deceased, and the order which follows dismisses the complaint as to this respondent. , Respondent AJ1, since its formation in 1954 , has been and is nOVl maintained, managed, controlled and operated by and for the respondent jobber members above-named, and each said respondent actively AUTOMOTIVE JOBBERS , INC. , ET AL.

Initial Decision participated in, approved, furthered and cooperated with the other respondents in carrying out the acts and practices hereinafter found which were hJ10wingly designed a.nd intended to induce the granting of discriminat.ory and iJ1legal prices, discounts, allowances, rebates terms and conditions of sale to the respondent jobber members. Such participation included serving as offcers and directors of respondent AJI, and as members of various committees of said group organization. The By - Laws of respondent AJI state:

The purpose of this association shall be to purchase from manufacturers goods wares and merchandise for such of its members who desire the same, in order to recei-ve quantity discounts or prices.

The corporate charter of respondent AJI states that it was formed for the purpose of purchasing from manufacturers, automotive goods wares, and merchandise for such of its members who desire the same in order to receive quantity.y discounts, or prices. 5. The respondent jobber members of respondent AJI have purchased and now purchase in interstate commerce from suppliers engaged in interstate commerce numerous automotive products and supplies for use, consumption or resale within their trade areas. Respondent jobbers and said suppliers cause the automotive products and supplies so purchased to be shipped and transported among and between the several states of the United States from the respective state or states of location of said suppliers to the respective different states of location of the respondent jobbers. The respondent jobber members of respondent AJI, in the purchase and resale of said aut.omotive products and supplies, a.re and have been in active and substantial competition "With other corporations, partnerships, firms and individuals "ho are also engaged in the purchase and resale of such automotive products and supplies of like grade and quality, in interstate COITnerce, whicl1 aut.omotive products and supplies have been purchased from the same and competitive sellers. The suppliers sening to respondent jobbers and their competitors are also in active and substantial competition with other suppliers of like or similar automotive products and supplies in interstate commerce. 6. R.respondent jobbers organized, and have maintained, controlled and operated, respondent AJI for t.he purpo.se. of inducing the granting or allowance of lower and more favorable prices by manufacturers and seDers of automotive products and supplies. It is a membership corporation serving only jobber members. Participation of respondent joboor members in the net income of respondent AJI is based on a percentage. of their individual purchases through the group organi- FE.DERAL TRADE CO:MMISSIOX DECISIONS Initial Decision 60 F.

zo.Lion. This is in line with the .l'imendecl Articles of Incorporation of respondent AJI which states as one of its purposes: '10 return to members the whole or any part of the net earnings or surplus resulting from its trading operations in proportion to their purcbases from tbe cOl'poratioli.

The same Amended Articles of Incorporation state that the products purchased by respondent AJI are only :for "resale and distribution to its members.

7. It "as the regular procedure for the respondent jobbers, acting through respondent AJI La either notify or a110'1, competing manufacturers of various lines of automotiyc pl'0c111cts and supplies to submit prices and appeal' before the members of the group, 01' ft committee. named for that purpose, ,rho \\ould consider the offers and yote to accept one or more of the lines to the exclusion of the lines of the seller competitors. A.. majority vote of the jobber members of respondent AJ1 was necessa.ry before a seller s line ,yas appro\ ed and adoptell as a. group line. Although it ,yas not a rigid requirement t.hat the jobber members handle all the gl' onp lines, in actual pract.ice, the members of the group purchased and sold most of the particular manllfacturers' lines accepted a.nd handled by the group. The wa.rehouse manager for respondent. -- J1 described the procedure fo1Jo1\ecl by the members in changing oyer to the grOllp lines. He described how he spent a" fe,\' days helping a group member change oyer all the lines in an outlet 'iyhich that member had recenUy purchased.

8. '\Vhen and if a demand is acceded to by a. particular snpplicr, the subsequent purchase transactions bet'iyeen the supplier and the individual jobber respondents leave been, and are, billed to and paid for through the organizational device of respondent A.JI. Said corporate orgitnization thus purports to be t.he purchaser, when in truth and in fact it ha.s been, and is now, serving only as agent for the scyeral respondent jobbers and as a bookkeeping c1eyice for facilitating the inducement and receipt by the respondent jobbers of the price discriminations concerned.

The respondent jobbers order their group Jines from their suppliers by using a standard form of order blank. The suppliers grant the respondents discounts and rebittes on their purchases in various ,'.-ys. Some deduct the discount and bill respondent A T1 at. "net prjce. Some give the discounts on the face of t.he invoice. Some allow rebates nt yariOllS intervals of time. Respondent AJ1 in turn bills its members (11' remits rebates in the same manner as the suppliers bill respondent 1\J1 or remit rebates to respondent AJ1. This procedure 1S used when AUTO fOl'IVE JOBBERS , INC. ) ET AL.

Initial Decision the suppliers "drop ship" products to the jobber members of respondent AJI as well as when the members buy from or through the gran p warehouse.

9. ,V110n a seller s line was accepted by respondent AJI, notice was sent to aU jobber members giving full information as to the contract terms agreed upon. These notices were in the form of "Approval Sheets:: which were supplied tothe jobber members. Also, respondent AJI distributed catalogs, price sheets, ete., to its jobbe,r members which items 'iyoro sent to respondent A.!I by its suppliers. On Jines not handled hy respondent A, , the jobber members deal directly with tho suppliers 10, There are approximately 140 suppliers seUiug the group lines to respondents. The purchases of ihe group from group suppliers throughout the years hate been substant.ial, ranging frorIl $;")55 \)56. in 1955 to $1 019 268.00 in 1959. The rebates and discounts received from the va.rious suppliers hy respondents are also substantial. 1957 the total rebates and discounts 'ivere $1(j2 147.30 compared to $914 146.52 of purchases.

11. ot all the lines handled by the group were stocked in the group 'i\"warehouse. . A warehouse line refers to those lines which were actually carried in the Also warehouse. ,V11en a jobber member wished purchase products from :1 warehouse line, an order was sent to respondent A. , 'ivho either procured the merchandise from the supplier or filled the order frolll its own warehouse stock. ,Vhen a delivery hnd been made, respondent A,TJ billed the jobber me.mber receiving the merchandise. Sornetimes a jobber member would receive a so-ealled sloC shiprnent. This mellnt that when a supplier shippeclnlcrchanclise to the A,JI 'iyarehol1se, it 'would be immccliate.1y shippccl to t.he johbe.r Ine.mber in the sunw packnge. :.lany suppliers illso ;; drop ship: directly to t.he jobber mcmbe. ;. Del\'i"een 33 percent and .10 percent of the members: purchases through responc1entJLJI arc drop shippecF to the members. Each jobber member settled monthly i,li,h respondent 1-\.J1 for his own individual purchases. The group offce ill turn made mOllthl - settlemenis -with the suppliers for the. aggregate purchases of a.ll :iobbpr members, and flll1wJIyor periodically distributed to the jobber members nlJ discollnts and rebates received less operating expenses, in proportion to the amount of each me.mber individual purchases. The jobber melnbers of n spondent AJI arc charged a warehouse fee of 5 percent on purchases made from t.he group warehouse, and 2 percent on "s)o(' shipments. These fees are to help offset the cost of operating the warehollse. _ _______ FEDERAL TRADE CO:M::IS'SION DECISIONS Jnitial Dccision 60 F.

12. Following is an analysis of the indivich",l purchases of each jobber member of products purchased from or through the group warehouse for the year 1959, taken from the 1959 Annual Report of respondent AJI :

Al:TO:vOTIVE JOBBERS, INC.

lim:VIBER PURCHASES AKALYSIS YEAR 1959 Percmt from DirectandSlDt From TVarelwnse 'T(jlalP1iTChlJ8fs Whse. Jobbers \Varehouse Service- - 872 847. 820 483. 2.1 893, 330. 38 21. 95 Senior Auto Parts___n--n- , 679. 39 , M5. 84 225. 23 24. Tilman Auto Parts----_---- , 568. 50 , 506. 91 , 075. 41 32. ood Tire & Supply----_--- , 9S7. 13 , 067. 16 , 045. 29 32. McDonald Automotive_____- , 850. 15 548. 398. 28. Rex Grove Auto Supply___ , 591. 49 478. , 069, 82 47. Brown Auto Supply--__ 431. 26 095. 17 , 526. 43 37. gg McKissack Auto Supply Co_ , 014. 22 , 838. 86 , 853. 08 28. Carter Auto Supply__ 1.'5 395. , 051. 61 , 446. 02 68. City Motor Supply --------- 510. , 192. 05 702. 56 25. Hutson Automotive, 735. 22 422. 53 157. 23. Texas Automotive-- -- - -- -- - 577. 13 171. 91 , 749. 04 42. The Murphy Co 337. 768. 11 , 105. 83 43. A. G. Waugh Co 794. 68 , \.8. 67 943. 35 38. The Bauer Co 410. , 543. Og 953. 40. fj2 Economy Auto Supply--___- 298. 60 , 700. 98 , 90g. 58 35. Ralph Clark Co 224. 39 3'12. 567. 20 42. Clark Auto Parts Supply - -- - 547. 98 , 03S. 35 , 486. 33 44. Suit' s Auto Supply_____- 741. 70 , 433. R9 175. 51: 21. 98 Grovc Auto Supply_ , 082. 46 301. 84 381. 43. Central Grinding Auto Supply --- ------ -- -- - , 585. 02 , 236. 19 821. 21 30. H. Brown Supply House-- , 649. 72 441. 93 091. 65 36. Capitol Auto Supply-- , 013. 69 , 042. 47 056. 16 45. Baker Auto Supply - -- -- -- , 007. 36 , 095. 39 102. 50. 658 871. 91 360 396. 16 1 019 268. 07 35. ,13 13. Respondent jobbers dermmd that those suppliers who sell their products pursuant to a quantity discount schedule shall consider their several purchases in tile aggregate as if made by onc pure-haser and grant quantity discounts, allowances, or rebates on the resultant combined purchase volume in accordance with said suppliers' schedule. This procedure effects a discrimination in price on goods of like grade and quality between respondent jobbers and cOlnpeting independent jobbers whose quantity cliscolUlts, allowances, or rebates from such suppliers are based upon only their individual purchase volumes. AUTOMOTIVE JOBBERS, INC., ET AL.

Initial Decision From other suppliers the respondent jobbers demand the payment or allowance of trade discounts, allowances, or rebates which such suppliers do not ordinarily payor allow to jobber customers. They demand to be classified asa warehouse distributor. This procedure effects a discrimination in price on goods of like gmde and quality between respondent jobbers and competing jobbers who are not afforded such trade discOlmts., allowances, or rebates. H. The volume rebate granted by certain suppliers to respondent jobber members ,vas a retroactivo volume rebate based upon the aggregate purchases of all the jobber members. Typical of such practices is the agreement with Standard fotor Products, Inc., which generally maintains a sliding scale of volume rebates on net amount purchased per year as follows:

l'craent Under $1 800 --- 800 - 200 --- $7, 200 --- 000 --- $12 000 - $25 000 --- $50, 000 - $75 000 - $100 000 - In the case of Automotive Jobbers, Inc., these rebates were not based on the purchases of the individual respondent jobber member, but instead were based upon the total purchases of aU the members of the grou p organization.

15. When respondent A.JI made payment to Standard Motor Products, Inc., for purchases made during the month by the respondent jobber members, it was permitted to deduct the maximum rebate of 20 percent on paying the invoices. 1Vhile the aggregate purchases of the jobber members reached the maximum volume of 8100 000 required for the 20 percent discount, no individual jobber member purchased near this amount. In fact, in 1959 the purchases of only two jobber members reached thc 15 percent bracket, and four members earned no discount whatever, and yet all members received the maximum 20 percent volume rebate. In the same trading area there were competitors of respondent jobbers purchasing merchandise of like grade and quality from Standard Motor Products, Inc., who received no discount, or a lower discount, based upon the actual amount of their purchases as provided by Standard' s volume rebate discount schedule.

FEDERAL 1'TRADE COMMISSION DECISIONS Initial Decision 60 P.

16. The warehouse distributor s discount was a discount paid to distributors on automotive products resold to other jobbers. warehouse distributor usually maintained at least a minimum stock of the suppliers' automotive products in his warehouse. Sales made to other jobbers were generally made at jobber s list price and the distributor relied upon the warehouse distributor discount for his compensation. In gra,nting this disCOlUlt to the respondent jobbers, the supplier treated the respondent AJI as a purchaser and resc11er to respondent jobber members, and granted the discount or rebate on a11 products purchased by the respondent jobber members through thc respondent AJI. This warehouse distributor s rebate on the aggregate purchases of the respondent jobbers was paid over to respondent AJI who, in turn, distributed the net after deduction of operating expenses to the jobber members in proportion to their individual purchases. In the same trading area there were competitors of respondent jobbers, purchasing products of Eke grade and quality from the same, and other, suppliers, and who received no discount as warehouse distributors.

17. In practice and effect, respondent A.JI has been, and is now serving as the medimll or instrumentality by, through, or in conjunction with, which sa.id respondent jobbers exert the influence of their combined bargaining power on the competitive suppliers he1'einbefore described. As a part of their operating procedure, respondent jobbers direct the attention of suppliers to their aggregatepurchasing pm-ver as a buying group and, by reason of such, have knmvingly demanded and receiyecl, upon their individual purchases discriminatory prices, discounts, allowances and rebates. Suppliers not aceeding to sneh demands are usually replaced as sources of supply for the commodities concerned and such 1Twl'ket is closed to them in favor of such suppliers as can be, and are, induced to afford the discriminat.ory prjees, discounts allowances and rebates so demanded. 18. The re,spondent jobbers kne'lv they were recei ring discriminatory and illegal prices, discounts, allmvanees and rebates from their suppliers. They know that the rebates allowed them "\,ere bnsecl not on the quantities or other factors involved in a particular sale and not upon quantities sold by them to other1' jobbers, but rather upon tl1c combined dollar amount of all sales to the respondent jobber members through the group organization and bear relationsl1ip to factors other than the actual costs of snJe and delivery. They were successful operators in a highly competitive ma.rket and knew that no cost justification could be maintained by the sellers, since in many instances no difference in the cost of sale or deJiyc.ry was involved. AUTOMOTIVE JOBBERS, INC. ET AL.

Initial Decision Furthermore, the respondent jobber members were placed upon notice as to the illegality of price discrimina60ns received through the medium of group-buying organizations similar to Automotive Jobbers, Inc., through knowledge of Federal Trade Commission orders involving other buying groups and various suppliers of those groups who were also suppliers of respondent AJI and its members. Those cases were discussed by the respondent jobbers at various times. The minutes of the meetings of the members are replete with such discussions. Aside from imputed knowledge, there is substantial evidence of actual know ledge shown in the record. 19. The automotive parts industry is a highly competitive business involving small margins of profit. The net margin of profit of a number of respondent jobber witnesses, as wen as non-member jobber witnesses, who testified, was from one (1) percent to four (4) percent after taxes. The importance of the discriminatory prices allowed by the various suppliers is pointed up by the importance given by respondent jobbers, and non-member jobbers, to the 2 percent cash discount allowed by their suppliers as increasing their margin of profit and !'edueing the cost of acquisition of their merchandise. Through the lower cost of merchandise, resulting from such discrimina.tory prices, the respondent jobbers obtained a substantial competitive advantage over their competitors who sell the same and comparable merchandise in the same trade areas and who received discounts or rebates based only upon their own indivichml purchases. CONCr.USIOXS 1. Respondents have induced and received from their suppliers, as herein found, discriminatory prices, discounts, a.lowances, rebates and terms and conditions of sale which they know, or should ha, knmvn, constituted price discriminations prohibited by Section 2(a) of the Clayton Act, as amended.

2. The acts and practices of the respondent jobbers in lmowingly inducing and receiving discriminations in price through the use of the group-buying organization, Automotive Jobbers, Inc., prohibited by Section 2(a) of the amended Clayton Act, as herein found, are in violation of Section 2(f) of the amended Clayton Act. ORDER It is ordered That respondent Automotive Jobbers, Inc. , a corporation; :Mrs. eva Baker, doing business under the firm name and style of Baker Auto Supply, a sole proprietorship; E. L. Bauer, doing FEDERAL TRADE COM:NfISSION DECISIONS Initial Decision 60 F.

business under the firm name and style of Bauer Auto Supply, a sale proprietorship; Blue Ribbon Auto Supply, Inc., a corporation; H. B. Braden, Jr., doing business under the firm na.me and style or I3raden Automotive, a sole proprietorship; J. IV. .YIitchell and W. L. Brown copartners doing business under the firm name and style or Brown Auto Supply: J aim M. Carter, doing business under the firm name and style of Carter Auto Supply, a sole proprietorship; Thomas Clark doing business under the firm na.me and style or Clark Auto Parts Supply, a sole proprietorship; R.a.lph CJark doing business under the firm name and style of Ralph Clark Company, a some proprietorship; C. E. Holder and j)f. 'V. Edgmon, eo partners doing business under the firm name and style or Ec1gmon-Ilolc1er j)lotor Supply; Eugene Straach, doing business under the firm name and style or Grove Auto Supply, a sale proprietorship; Rex Grove Auto Supply Company, Inc., a corporation; M. R. 'Walker, n. C. IcKinley and J. O. Thompson, copartners doing business under.r the .frm name and style or r jobbers IVarehouse Service; Sam .Ylnrphy, doing business under the firm name and style of l\lurphy Automotive Supply, a sale proprietorship; L. E. Shafer, doing business under the firm name and style of Senior Auto Parts, a sale proprietorship; Phil Crawford, O. J. Chase and R. R. Crawford, copartners doing business under the firm name and style of Texas Automotive Supply; Vernon Pennington, doing business under the firm name and style of Vernon Parts Company, a sale proprietorship; James E. ' alker, doing business under the firm name and style of 'Walker Auto Parts, a sale proprietorship; Ethel ';Vaugh and Guy V. Cope, copartners doing business under the firm name and style of A. G. '\Vaugh Company; and Mac1io E. IVooel, doing business under the firm name and style of IVood Tire & Supply Company, a sale proprietorship; and respondents' agents, representatives, and e,mployecs, directly or through any corporate or other device, in connection with the offering to purchase or purchase of any automotive products or supplies in commerce, as "commerce" is defined in the Clayton Act, as amended, do forthwith cease and desist from: I(nD"vingJy inducing or knowingly receiving or a.accepting a.ny dis crimination in the price of such products and supplies, by directly or indirectly inducing, receiving, or accepting from any seller a. net price known by respondents to be below the net price at which said products and supplies of like grade and quality are being sold by such seller to other customers, where the seller is competing with any other sener for respondents' business, or where respondents arc competing with other customers of the seller. PATI-PORT, INC. , ET AL.

Complaint For the purpose of determining "net price" under the terms of this order, there shall be taken into account discounts, Tr,bates, allowances deductions or 00181' terms and conditions of sale by Vdlich net prices arc effected.

It is tnTtheT ordered That the complaint herein be, and it hereby is dismissed as to .J ames Lacey, now deceased. FINAL ORDER By its order of November 28, 1951, the COJilnission extended until further order the elate on which the initial decision of the hearing examiner herein would become the decision of the Commission; and The Commission now having concluded that said initial decision is appropriate in all respects to dispose of this proceeding: It ordered That the initial decision of the hearing examiner filed October 13, 1951, be, and it hereby is, adopted as the decision of the Commission.

It is tnrther ordered That all of the respondents herein shall, within sixty (50) days after service upon them of this order, file with the Commission f1 report, in writing, setting forth in detail the manner and form in which they have complied with the order to cease and desist.