Crush International Limited

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IN THE ATTER OF CRUSH INTERNATIONAL LI ITED, ET AL., DKT. NO. 8853 DR. PEPPER CO PANY, DKT. NO. 8854 THE SEVEN-UP CO PANY, DKT. NO. 8857 THE ROYAL CROWN COLA CO PANY, DKT. NO. 8858 NORTON SI , INC., ET AL., DKT. NO. 8877 FINAL ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Complaints, July 15 J971 * and March 3, 1972** Order, Sept. , 1981 This order dismisses without prejudice the complaints issued by the Commission in 1971"'1972; against five major soft drink manufacturers charged with. attempting to restrict where bottlers may sell, by including "territorial exclusivity" provisions in their licensing agreements. The Commission concluded that since the instant complaints were based on the same legal standards utilized in the matters of Coca-Cola Co. and Pepsico Co. which were subsequently set aside due to changes wrought by the 19S0Soft Drink Interbrand Competition Act, further proceedings would not be in the public interest at this time.

Appearances For the Commission: Ronald A. Bloch and David 1. Wilson. For the respondents: Louis J. Keating, Kirkland Ellis Chicago, Ill., for Crush International, Ltd. , w: D. White, Sr., Rain, Harrell, Emery, Young Doke, Dallas, Tex., for Dr. Pepper Co. Eugene J. Meigher, Arent, Fox, Kintner, Plotkin Kahn Washington, D.C., for , Kirkland EllisThe Seven-Up Co. James H. Wallace, Jr. , and EdwinWashington, D. , for The Royal Crown Cola Co. Rockefeller, Bierbower Rockefeller Washington, D. , for Norton Simon, Inc., and Canada Dry Corp.

COMPLAINT The Federal Trade Commission, having reason to believe that the parties named in the caption hereof, each of which separately is made and sometimes hereinafter referred to as respondent(s), or respectively as Crush International Limited, Beverages Internation- . Crush International Limire, et aI. , Dr. Pepper OJ., The Seven-Up Co., and The Royal Crown Colao.. .. Nortn Simon, Inc., etal.

(g) CRUSH INT'L LTD., ET AL. 429 428 Complaints al Inc. or Crush International Inc., have violated the provisions of Section 5 of the Federal Trade Commission Act (15 U.8.c. 45), and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. For the purposes of this complaint, the following definitions shall apply:

(a) Bottler - any individual, partnership, corporation, association or other business or legal entity which purchases respondents concentrate for use in the manufacture and sale, primarily at wholesale, of respondents' pre-mix or post- mix syrups or soft drink products, or who purchases respondents' pre-mix or post- mix syrups or soft drink products for resale, primarily at wholesale; (b) Central warehousing - a method of distribution in which soft drink products are received at a storage facility and either resold or delivered to retail outlets or wholesalers; (c) Concentrate - the basic soft drink ingredient sold to bottlers by respondents, which is combined with water and other ingredients for packaging in bottles or cans for sale and distribution as soft drink products, or is used to make post-mix and pre-mix syrups; (2) (d) Consignment - a form of distribution in which the consignor retains title, dominion, bears all risks of loss and delivers his products to the consignee who is indistinguishable from a salesman or agent;

(e) Place of business - the location of any facilities available to a bottler without regard to customers or geographic area for production or service in the conduct of business operations, to include but not limited to business headquarters, branch sales offices, warehouses and garages, but specifically excluding the plant at which a bottler combines concentrate with water, and possibly other ingredients, for the packaging of soft drink products; (I) Post-mix syrup - soft drink concentrate which is used in fountain dispensing or vending equipment and is usually sold by bottlers in steel tanks. A typical post-mix system draws one ounce of syrup from a five-gallon tank and mixes it at the point of sale with five ounces of carbonated water to produce 600 six-ounce finished soft drink servings per tank;

Pre-mix syrup - although essentially the same syrup as postmix, a pre-mix system differs from a post-mix system in that it draws from a five-gallon tank a serving of soft drink products containing both syrup and carbonated water to produce 100 six-ounce finished soft drink servings per tank; and Complaints 98 F.

(h) Soft drink products - nonalcoholic beverages and colas carbonated and uncarbonated, flavored and nonflavored, sold in bottles and cans, or through pre-mix and post-mix systems or the like.

PAR. 2. Respondent Crush International Limited is a corporation organized, existing and conducting its business under and pursuant to the laws of the Province of Ontario, Canada. It maintains its office and principal place of business at 1590 O'Connor Drive, Toronto 16 Canada. In the United States, an office is maintained at 2201 ~ain St., Evanston, Ilinois.

Respondent Beverages International Inc., a wholly-owned subsidiary of Crush International Limited, is a corporation organized, existing and conducting its business under and pursuant to the laws of the State of Ilinois. It maintains its office and principal place of business at 2201 Main St., Evanston, Ilinois. (3) Respondent Crush International Inc., a wholly-owned subsidiary of Crush International Limited, is a corporation organized, existing and conducting its business under and pursuant to the laws of the State of Delaware. It maintains its office and principal place of business at 2201 ~ain St., Evanston, Ilinois.

PAR. 3. Respondent Crush International Limited is engaged principally in the manufacture and sale of concentrate which it sells to its bottlers who purchase the concentrate under a license to produce and sell soft drink products under such trade names as Orange Crush Gurd' s Ginger Ale American Dry Ginger Ale, " ttKick-Kola Grape Crush Lime Crush Hires Root Beer Grapefruit Crush Lemon-Lime Crush Cola Crush Cream Soda," "Bitter Lemon," "Brio Chinotto " and "India Express. Plants for the manufacture of concentrate are located in Canada at Toronto and Ottawa, Ontario and ~ontreal, Quebec, and in the United States at Evanston, Ilinois and Trenton, New Jersey. Approximately 300 United States and 30 Canadian bottlers are franchised to sell its Orange Crush and/or Hires Root Beer soft drink products. Bottlers combine the concentrate with water and other ingredients and package the mixture in bottles for resale as soft drink products to retailers.

For the year ending October 30, 1968, Crush International Limited had sales of $33 069,442, and assets of $21 178 277 (Canadian dollars). As to its wholly-owned United States subsidiaries, Beverages International Inc. and Crush International Inc., sales of concentrate and Orange Crush and Hires Root Beer soft drink products were made to over 300 domestic bottlers in 1968. In the CRUSH INT'L LTD., ET AL. 131 428 Complaints United States, agreements for Orange Crush and Hires Root Beer trademarked concentrate and soft drink products are between the bottler and Crush International Inc. and Beverages International Inc.

Corporate officers of Beverages International Inc. and Crush International Inc., are identical; and Mr. Louis Collins is President of these respondents as well as of respondent Crush International Limited.

PAR. 4. Respondents are engaged in "commerce" within the meaning of the Federal Trade Commission Act (15 U. C. 44) in that a continuous flow of interstate and foreign commerce regarding concentrate and soft drink products (4Jexists between offices in Evanston, Illinois and Toronto, Ontario, and production facilities in Canada at Toronto and Ottawa, Ontario, and ~ontreal, Quebec, and in the United States at Evanston, Ilinois, and Trenton, New Jersey, and the numerous bottlers located throughout the United States which purchase their products.

PAR. 5. In the course and conduct of their businesses, respondents, except to the extent limited by the acts, practices and methods of competition hereinafter alleged; have been and are now in competition with other corporations, firms, partnerships and persons engaged in the manufacture, processing, distribution and sale of concentrate and soft drink products in commerce. PAR. 6. Respondents have hindered, frustrated, lessened and eliminated competition in the distribution and sale of pre-mix and post-mix syrups and soft drink products sold under their trade names by restricting bottlers from selling outside of a designated geographical area. This restriction is set forth in the agreements between respondents Beverages International Inc., or Crush International Inc., and their bottlers. A typical agreement between respondents Beverages International Inc., or Crush International Inc., and their bottlers provides that:

Botter shall use its best efforts to sell (CRUSH/HIRES) within TERRITORY and not deliver or sell (CRUSH/IIIRESJ outside of TERRITORY. Bottler shall not knowingly sell (CRUSH/HIRESj within TERRITORY for resale or delivery outside of TERRITO- RY or sell or deliver (CRUSH/HIRES) to any person after having been notified by COMPANY that such person is reselling or delivering (CRUSH/HIRES) outside TERRITORY.

PAR. 7. The aforesaid agreements used by respondents, Beverages International Inc. and Crush International Inc., the whollyowned subsidiaries of respondent Crush International Limited, have had, and may continue to have, the following effects: 432 FF;DERAL TRADE COMMISSION DECISIONS Complaints 98 F. T. (a) Competition between and among respondents' bottlers in the distribution and sale of "Hires Root Beer" and "Orange Crush" brands of soft drink products has been eliminated; (b) Innumerable retailers and other customers have been deprived of the right to purchase "Hires Root Beer" and "Orange Crush" brands of soft drink products from the bottler of their choice at a competitive price; and (5) (c) Consumers of "Hires Root Beer" and "Orange Crush" brands of soft drink . products have been deprived of the opportunity of obtaining such products in an unrestricted market and at competitive prices.

PAR. 8. Respondents' contracts, agreements, acts, practices and methods of competition aforesaid have had, and may continue to have, the effect of lessening competition in the advertising, merchandising, distribution, offering for sale and sale of pre-mix and post-mix syrups and soft drink products; deprive, and may continue to deprive, the public of the benefits of competition in the purchase of soft drink products; and constitute unfair methods of competition and unfair acts or practices, in commerce, in violation of Section 5 of the Federal Trade Commission Act.

COMPLAINT The Federal Trade Commission, having reason to believe that the Dr. Pepper Company, hereby made and sometimes hereinafter referred to as respondent, or Dr. Pepper, has violated the provisions of Section 5 of the Federal Trade Commission Act (15 U.8.C. 45), and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. For the purposes of this complaint, the following definitions shall apply:

(a) Bottler - any individual, partnership, corporation, association or other business or legal entity which purchases respondent' concentrate for use in the manufacture and sale, primarily at wholesale, of respondent's pre-mix or post-mix syrups or soft drink products, or who purchases respondent' s pre-mix or post-mix syrups or soft drink products for resale, primarily at wholesale; (b) Central warehousing - a method of distribution in which soft drink products are received at a storage facility and either resold or delivered to retail outlets or wholesalers; (c) Concentrate - the basic soft drink ingredient sold to bottlers by (g) CRUSH INT'L LTD., ET AL. 433 428 Complaints respondent, which is combined with water and other ingredients for packaging in bottles or cans for sale and distribution as soft drink products, or is used to make post-mix and pre-mix syrups; (d) Consignment - a form of distribution in which the consignor retains title, dominion, bears all risks of loss and delivers his products to the consignee who is indistinguishable from a salesman or agent; (2) (e) Place of business - the location of any facilities available to a bottler without regard to customers or geographic area for production or service in the conduct of business operations, to include but not limited to business headquarters, branch sales offices, warehouses and garages, but specifically excluding the plant at which a bottler combines concentrate with water, and possibly other ingredients, for the packaging of soft drink products; (D Post-mix syrup - soft drink concentrate which is used in fountain dispensing or vending equipment and is usually sold by bottlers in steel tanks. A typical post-mix system draws one ounce of syrup from a five-gallon tank and mixes it at the point of sale with five ounces of carbonated water to produce 600 six-ounce finished soft drink servings per tank;

Pre-mix syrup - although essentially the same syrup as postmix a pre-mix system differs from a post-mix system in that it draws from a five-gallon tank a serving of soft drink products containing both syrup and carbonated water to produce 100 six-ounce finished soft drink servings per tank; and (h) Soft drink products - nonalcoholic beverages and colas carbonated and uncarbonated, flavored and nonflavored, sold in bottles and cans, or through pre-mix and post-mix systems or the like.

PAR. 2. Respondent is a corporation organized, existing and conducting its business under and pursuant to the laws of the State of Colorado. It maintains its office and principal place of business at 5523 ~ockingbird Lane, Box 5986, Dallas, Texas. Respondent had sales of $41 883 072 and assets of $19,479 696 in 1969. In 1968, Dr. Pepper made sales to over 482 bottlers located in every state of the United States.

PAR. 3. Respondent is engaged principally in the manufacture and sale of concentrate which it sells to its over 482 bottlers who purchase the concentrate under a license to produce and sell soft drink products under respondent's trade names such as ('Dr. Pepper Dietetic Dr. Pepper" and "Salute." Dr. Pepper bottlers combine the concentrate with water and other ingredients and . .

Complaints 98 F.

package the mixture in bottles and cans for resale as soft drink products to retailers. In addition to manufacturing and selling concentrate to its bottlers, Dr. Pepper operates bottling plants in three areas of the United States and sells soft drink products to retailers. (3) PAR. 4. Respondent is engaged in " commerce" within the meaning of the Federal Trade Commission Act (15 U. C. 44) in that a continuous flow of interstate commerce in pre-mix concentrate and soft drink products exists between its headquarters and production facilities located in Dallas, Texas, and the numerous bottlers located throughout the United States which purchase its products. PAR. 5. In the course and conduct of its business, respondent except to the extent limited by the acts, practices and methods of competition hereinafter alleged, has been and is now in competition with other corporations, firms, partnerships and persons engaged in the manufacture, processing, distribution and sale of soft drink products in commerce.

PAR. 6. Dr. Pepper has hindered, frustrated, lessened and eliminated competition in the distribution and sale of pre-mix and postmix syrups and soft drink products sold under its trade names by restricting its bottlers from selling outside of a designated geographical area. This restriction is set forth in the agreements between respondent and its bottlers. A typical agreement between respondent and its bottlers provides that the bottler ". . . at all times agrees not to sell bottled Dr. Pepper outside the said licensed territory and not to sell such product knowingly to any purchaser who intends to place such product for sale outside the said licensed territory. PAR. 7. The aforesaid agreements used by respondent have had and may continue to have, the following effects: (a) Competition between and among respondent's bottlers in the distribution and sale of "Dr. Pepper Dietetic Dr. Pepper" and Salute" brands of soft drink products has been eliminated; (b) Competition between and among Dr. Pepper s bottling operations and its botters in the distribution and sale of Dr Pepper soft drink products at the wholesale level has been eliminated; (c) Innumerable retailers and other customers have been deprived of the right to purchase "Dr. Pepper Dietetic Dr. Pepper and "Salute" brands of soft drink products from the bottler of their choice at a competitive price; and (4) (d) Consumers of "Dr. Pepper Dietetic Dr. Pepper" and Salute" brands of soft drink products have been deprived of the CRUSH INT'L LTD., ET AL. 435 428 Complaints opportunity of obtaining such products in an unrestricted market and at competitive prices.

PAR. 8. Respondent's contracts, agreements, acts, practices and methods of competition aforesaid have had, and may continue to have, the effect of lessening competition in the advertising, merchan. dising, distribution, offering for sale and sale of pre-mix and post-mix syrups and soft drink products; deprive, and may continue to deprive, the public of the benefits of competition in the purchase of soft drink products; and constitute unfair methods of competition and unfair acts or practices, in commerce, in violation of Section 5 of the Federal Trade Commission Act.

COMPLAINT The Federal Trade Commission, having reason to believe that The Seven-Up Company, hereby made and sometimes hereinafter referred to as respondent, or Seven-Up, has violated the provisions of Section 5 of the Federal Trade Commission Act (15 U. C. 45), and it appearing to the Commission that a proceeding by it in respect thereof would be in the public int rest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. For the purposes of this complaint, the following definitions shall apply:

(a) Bottler - any individual, partnership, corporation, association or other business or legal entity which purchases respondent's concentrate for use in the manufacturing and sale primarily at wholesale, of respondent' s pre-mix or post-mix syrups or soft drink products or who purchases respondent' s pre-mix or post-mix syrups or soft drink products for resale, primarily at wholesale; (b) Central Warehousing - a method of distribution in which soft drink products are received at a storage facility and either resold or delivered to retail outlets or wholesalers; (c) Concentrate - the basic soft drink ingredient sold to bottlers by respondent, which is combined with water and other ingredients for packaging in bottles or cans for sale and distribution as soft drink products, Or is used to make post-mix and pre-mix syrups; (d) Consignment - a form of distribution in which the consignor retains title, dominion, bears all risks of loss and delivers his products to the consignee who is indistinguishable from a salesman or agent; (2) (e) Place of business - the location of any facilities available to a bottler without regard to customers or geographic area for produc- (g) 436 DERAL TRADE COMMISSION DECISIONS Complaints 98 F.

tion or service in the conduct of business operations, to include but not limited to business headquarters, branch sales offices, warehouses and garages, but specifically excluding the plant at which a bottler combines concentrate with water, and possibly other ingredients, for the packaging of soft drink products; CD Post-mix syrup - soft drink concentrate which is used in fountain dispensing or vending equipment and is usually sold by bottlers in steel tanks. A typical post-mix system draws one ounce of syrup from a five-gallon tank and mixes it at the point of sale with six ounces of carbonated water to produce 600 six-ounce finished soft drink servings;

Pre-mix syrup - although essentially the same syrup as postmix, a pre-mix system differs from a post-mix system in that it draws from a five-gallon tank a serving of soft drink products containing both syrup and carbonated water to produce 100 six-ounce finished soft drink servings; and (h) Soft drink products - nonalcoholic beverages and colas carbonated and uncarbonated, flavored and nonflavored, sold in bottles and cans, or through pre-mix and post-mix systems or the like.

PAR:" 2. Respondent is a corporation organized, existing and conducting its business under and pursuant to the laws of the State of ~missouri. It maintains its offce and principal place of business at 121 South Meramec, St. Louis, ~missouri. Respondent had sales of $83 255 014 and assets of $38 894 206 in 1969. In 1968, Sevenmade sales to over 470 domestic bottlers located in every State ofthe United States.

PAR. 3. Respondent is engaged principally in the manufacture and sale of concentrate which it sells to its over 470 bottlers who purchase the concentrate under a license to produce and sell soft drink products under respondent's trade names such as " Up, Diet 7-Up, LIKE" and "Howdy. " Seven-Up bottlers combine the concentrate with water and other ingredients and package the mixture in bottles and cans for resale as soft drink products to retailers.

PAR. 4. Respondent is engaged in "commerce" within the meaning of the Federal Trade Commission Act (15 U.8.C. 44) in that a continuous flow of interstate (3)commerce in concentrate and soft drink products exists between its headquarters and production facilities located in St. Louis, ~missouri, and the numerous bottlers located throughout the United States which purchase its products. PAR. 5. In the course and conduct of its business, respondent q.j( CRUSH INT'L LTD., ET AL.

428 Complaints except to the extent limited by the acts, practices and methods of competition hereinafter alleged, has been and is now in competition with other corporations, firms, partnerships and persons engaged in the manufacture, processing, distribution and sale of soft drink products in commerce.

PAR. 6. Seven-Up has hindered, frustrated, lessened and eliminated competition in the distribution and sale of pre-mix concentrates and soft drink products sold under its trade names by restricting its bottlers from sellng outside of a designated geographical area. This restriction is set forth in the agreements between respondent and its bottlers.

A typical agreement between respondent and its bottlers provides that the ". . . Bottler shall not directly or indirectly sell or distribute Up in any territory other than hereinbefore described. PAR. 7. The aforesaid agreements used by respondent have had, and may continue to have, the following effects: (a) Competition between and among respondent's bottlers in the distribution and sale of " Up, Diet Up, LIKE" and I'Howdy brands of soft drink products has been eliminated; (b) Innumerable retailers and other customers have been deprived of the right to purchase " Up, Diet 7-Up, LIKE;' and Howdy" brands of soft drink products from the bottler of their choice at a competitive price; and (c) Consumers of " Up, Diet 7-Up, LIKE" and "Howdy brands of soft drink products have been deprived of the opportunity of obtaining such products in an unrestricted market and at competitive prices. (4) PAR. 8. Respondent's contracts, agreements, acts, practices and methods of competition aforesaid have had, and may continue to have, the effect of lessening competition in the advertising, merchandising, distribution, offering for sale and sale of pre-mix concentrates and soft drink products; deprive, and may continue to deprive, the public of the benefits of competition in the purchase of soft drink products; and constitute unfair methods of competition and unfair acts or practjces, in commerce, in violation of Section 5 of the Federal Trade Commission Act.

COMPLAINT The Federal Trade Commission, having reason to believe that the Royal Crown Cola Company, hereby made and sometimes hereinafter referred to as respondent, or Royal Crown, has violated the (g) Complaints 98 F.TC. provisions of Section 5 of the Federal Trade Commission Act (15 U.8.C: 45), and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH 1. For the purposes of this complaint, the following definitions shall apply:

(a) Bottler - any individual, partnership, corporation, association or other business or legal entity which purchases respondent's concentrate for use in the manufacture and sale, primarily at wholesale, of respondent' s pre-mix or post-mix syrups or soft drink products, or who purchases respondent' s pre-mix or post-mix syrups or soft drink products for resale, primarily at wholesale; (b) Central warehousing - a method of distribution in which soft drink products are received at a storage facility and either resold or delivered to retail outlets or wholesalers; (c) Concentrate - the basic soft drink ingredient sold to bottlers by respondent, usually as a syrup. and which is combined with water and other ingredients for packaging in bottles or cans for sale and distribution as soft drink products, or is used to make post-mix and pre-mix syrups;

(d) Consignment - a form of distribution in which the consignor retains title, dominion, bears all risks of loss and delivers his products to the consignee who is indistinguishable from a salesman or agent; (2) (e) Place of business - the location of any facilities available to a bottler without regard to customers or geographic area for production or service in the conduct of business operations, to include but not limited to business headquarters, branch sales offices, warehouses and garages, but specifically excluding the plant at which a bottler combines concentrate with water, and possibly other ingredients, for the packaging of soft drink products; (D Post- mix syrup - soft drink concentrate which is used in fountain dispensing or vending equipment and is usually sold by bottlers in steel tanks. A typical post-mix system draws one ounce of syrup from a tank, usually having about a five-gallon capacity and mixes it at the point of sale with five ounces of carbonated water to produce approximately 600 six-ounce finished soft drink servings per tank;

Pre-mix syrup - although essentially the same syrup as postmix, a pre-mix system differs from a post-mix system in that it draws from a tank, usually having about a five-gallon capacity, a finished serving of soft drink product containing both syrup and carbonated CRUSHllH L .lUJ. h H- 428 Complaints water pre mixed to produce 100 six-ounce soft drink servings per tank; and (h) Soft drink products - nonalcoholic beverages and colas carbonated and uncarbonated, flavored and nonflavored, sold in bottles and cans, or through pre-mix and post-mix systems or the like.

PAR. 2. Respondent is a corporation organized, existing and conducting its business under and pursuant to the laws of the State of Delaware. It maintains its office and principal place of business at 1000 10th Ave., Box 1440, Columbus, Georgia. Respondent had sales of $80 059 394 and assets of $23 873 489 in 1969. In 1968, Royal Crown Cola made sales to over 333 domestic bottlers located in every state of the United States.

PAR. 3. Respondent is engaged principally in the manufacture and sale of concentrate which it sells to its over 333 bottlers who purchase the concentrate under a license to produce and sell soft drink products under respondent's trade names such as "Royal Crown Diet Rite Nehi Par- Pak Kick " HLift" and Gatorade." Royal Crown bottlers combine the concentrate with water and other ingredients and package the mixture in bottles and cans for resale as soft drink products to retailers. In addition, to manufacturing and sellng concentrate to its bottlers, it operates bottling plants in seven areas of the United States and sells soft drink products to retailers. (3) PAR. 4. Respondent is engaged in "commerce" within the meaning of the Federal Trade Commission Act (15 U. C, 44) in that a continuous flow of interstate commerce in concentrate and soft drink products exists between its headquarters and production facilities located in Columbus, Georgia, and the numerous bottlers located throughout the United States which purchase its products. PAR. 5. In the course and conduct of its business, respondent except to the extent limited by the acts, practices and methods of competition hereinafter alleged, has been and is now in competition with other corporations, firms, partnerships and persons engaged in the manufacture, processing, distribution and sale of concentrate and soft drink products in commerce.

PAR. 6. Royal Crown has hindered, frustrated, lessened and eliminated competition in the distribution and sale of pre-mix and post-mix syrups and soft drink products sold under its trade names by restricting its bottlers from sellng outside of a designated geographical area. This restriction is set forth in the agreements between respondent and its franchised bottlers. A typical agreement q Complaints 98 r' between respondent and its bottlers provides that "The license of the bottler to sell Royal Crown beverages and to use the company Royal Crown trademark is limited to the described territory, and the bottler shall not sell Royal Crown beverages to any person for resale without the limits of said territory.

PAR. 7. The aforesaid agreements used by respondent have had, and may continue to have, the following effects: (a) Competition between and among respondent's bottlers in the distribution and sale of "Royal Crown Diet Rite Nehi," Par- Pak," HKick Lift" and "Gatorade" brands of soft drink products has been eliminated;

(b) Competition between and among Royal Crown s bottling operations and its bottlers in the distribution and sale of Royal Crown soft drink products at the wholesale level has been eliminated;

(c) Innumerable retailers and other customers have been deprived of the right to purchase "Royal Crown Diet Rite " HNehi Par- Pak Kick Lift" and " Gatorade" brands of soft drink products from the bottler of their choice at a competitive price; and (4) (d) Consumers of "Royal Crown niet Rite Nehi Par- Pak " fCKick Lift" and HGatorade" brands of soft drink products have been deprived of the opportunity of obtaining such products in an unrestricted market and at competitive prices. PAR. 8. Respondent's contracts, agreements, acts, practices and methods of competition aforesaid have had, and may continue to have, the effect of lessening competition in the advertising, merchandising, distribution, offering for sale and sale of pre-mix and post-mix syrups and soft drink products, deprive, and may continue to deprive, the public of the benefits of competition in the purchase of pre-mix, post-mix and soft drink products; and constitute unfair methods of competition and unfair acts or practices, in commerce, in violation of Section 5 of the Federal Trade Commission Act. COMPLAINT The Federal Trade Commission, having reason to believe that Norton Simon, Inc. and its wholly-owned subsidiary, Canada Dry Corporation, each hereby made and sometimes hereinafter referred to as respondent(s), or as Norton Simon or Canada Dry, have violated the provisions of Section 5 of the Federal Trade Commission Act (15 U . C. 45), and it appearing to the Commission that a proceeding by (g) CRU INTL Id.u. Lh 428 Complaints it in respect thereof would be in tbe public interest, hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH 1. For the purposes of this complaint, the following definitions shall apply:

(a) Bottler - any individual partnership, corporation, association or other business or legal entity which purchases respondents concentrate for use in the manufacture and sale, primarily at wholesale, of respondents' pre-mix or post-mix syrups or soft drink products, or who purchases respondents' pre-mix or post-mix syrups or soft drink products for resale, primarily at wholesale; (b) Central warehousing - a method of distribution in which soft drink products are received at a storage facility and either resold or delivered to retail outlets or wholesalers; (c) Concentrate - the basic soft drink ingredient sold to bottlers by respondents, which is combined with water and other ingredients for packaging in bottles or cans for sale and distribution as soft drink products, or is used to make post-mix and pre-mix syrups; (2) (d) Consignment - a form of distribution in which the consignor retains title, dominion, bears all risks of loss and delivers his products to the consignee who is indistinguishable from a salesman or agent;

(e) Place of business - the location of any facilities available to a bottler without regard to customers or geographic area for production or service in the conduct of busines operations, to include but not limited to business headquarters, branch sales offices, warehouses and garages, but specifically excluding tbe plant at which a bottler combines concentrate with water, and possibly other ingredients, for the packaging of soft drink products; (D Post-mix syrup - soft drink concentrate which is used in fountain dispensing or vending equipment and is usually sold by bottlers in steel tanks. A typical post-mix system draws one ounce of syrup from a five-gallon tank and mixes it at the point of sale with five ounces of carbonated water to produce 600 six-ounce finished soft drink servings per tank;

Pre-mix syrup - although essentially the same syrup as postmix, a pre-mix system differs from a post-mix system in that it draws from a five-gallon tank a serving of soft drink products containing both syrup and carbonated water to produce 100 six-ounce finished soft drink servings per tank; and (h) Soft drink products - nonalcoholic beverages and colas carbonated and uncarbonated, flavored and non-flavored, sold in Q" - ' OL 3 442 DERAL TRADE COMMISSION DECISIONS Complaints 98 F.

bott' s and cans, or through pre-mix and post-mix systems or the like.

PAR. 2. Respondent Norton Simon is a corporation organized existing and conducting its business under and pursuant to the laws of the State of Delaware. It maintains its office and principal place of business at 230 Park Ave., New York, New York. Respondent Norton Simon had sales of $1 046 031 000 in 1970 and of $984 428 000 in 1969. Assets totaled $734 545 000 in 1969. (3) Respondent Canada Dry, since 1968 a wholly-owned subsidiary of Norton Simon, is a corporation organized. existing and conducting its business under and pursuant to the laws of the State of Delaware. It maintains its executive offces and principal place of business at 100 Park Ave, New York, New York. Respondent Canada Dry was incorporated in the State of Delaware on June 30, 1969. Respondent Canada Dry is the successor to the concentrate and soft drink business of an earlier corporation which was incorporated in the State of Delaware on ~ay 13, 1968, as the Nadaca Beverage Corporation; such name being changed to Canada Dry Corporation on July 17, 1968. The Nadaca Beverage Corporation was the successor to all business of another Canada Dry Corporation which was incorporated in the State of Delaware on June 1 , 1925. Whenever acti ities, undertakings, arrangements or agreements of respondent Canada Dry are alleged to have occurred prior to June , 1969, it shall refer to the appropriate predecessor corporation during the applicable period. In 1969, Respondent Canada Dry had sales of approximately $7 300 000 for soft drink concentrate to over 190 licensed bottlers located in every State of the United States. Total soft drink sales by Canada Dry were $108 200 000 in 1969. PAR. 3. Respondent Norton Simon through various subsidiaries is engaged in diverse businesses, such as the sale of soft drink products and concentrate, and distilled spirits (Canada Dry), food and food service (Hunt Foods & Industries, Inc.), packaging systems (United Can Co., and Glass Containers Corp.), and communications (~cCall Publishing Co., and Saturday Review, Inc.). In 1969 sales by respondent Canada Dry (including distiled spirits sales) accounted for approximately 20% of total sales by Norton Simon. In 1967, prior to its acquisition by Norton Simon, Canada Dry had net sales in excess of $175 000 000.

Respondent Canada Dry is engaged principally in the manufacture and sale of concentrate which it sells to its over 190 bottlers who purchase the concentrate under a license to produce and sell soft drink products under respondent's trade names such as 'Wink . .

CRUSH INT'L LTD. , RT AL. 44;j 428 Complaints Sport Cola HI-SPOT Tahitian Treat " and "Canada Dry brand ginger ale, club soda, collns (4Jmixer, quinine water, bitter lemon, and various flavored beverages including root beer, orange grape, lemon-lime, black cherry, and strawberry. Canada Dry bottlers combine the concentrate with water and other ingredients and package the mixture in bottes and cans for resale as soft drink products to retailers. In addition to manufacturing and selling concentrate to its bottlers, Canada Dry operates bottling plants in several areas of the United States and sells soft drink products to retailers.

PAR. 4. Respondents are engaged in commerce within the meaning of the Federal Trade Commission Act (15 U. C. 44) in that Norton Simon, through its wholly-owned subsidiary, Canada Dry, causes a continuous flow of interstate commerce in soft ddnk products and concentrate to exist between Canada Dry headquarters and production facilities and the numerous bottlers located throughout the United States which purchase their products. PAR. 5. In the course and conduct of their businesses, respondents, except to the extent limited by the acts, practices and methods of competition hereinafter alleged, have been and are now in competition with other corporations, firms, partnerships and persons engaged in the manufacture, processing, distribution and sale of soft drink products in commerce.

PAR. 6. Respondents have hindered, frustrated, lessened and eliminated competition in the distribution and sale of pre-mix and post-mix syrups and soft drink products sold under their trade names by restricting their bottlers from selling outside of a designated geographical area. This restriction is set forth in the agreements between respondents and their bottlers. A typical agreement between respondent Canada Dry and its bottlers provides that: ARTICLE 1. License and Territory. Canada Dry hereby grants the Bottler and the Bottler hereby accepts from Canada Dry an exclusive license to manufacture, bottle sell and distribute the "CANADA DRY" beverages referred to below in the following territory only.

or provides that: (5J The Bottler agrees that it wil not manufacture, bottle, sell or distribute, directly or indirectly. carbonated beverages under the trade names or trademarks of Canada Dry elsewhere than in the territory hereinabove described. Canada Dry also sells soft drink products to bottlers (as that term is defined heretofore) in bottes and cans pursuant to an agreement which typically provides that:

Initial Decision 98 F. In as much as a portion of the State of Texas is served by franchised Bottlers, we ask that you do not, under any circumstances, make deliveries of Canada Dry merchandise into the following areas:

(The territory is described.

PAR. 7. The aforesaid agreements used by respondents have had and may continue to have, the following effects: (a) Competition between and among respondent Canada Dry botters in the distribution and sale of "Wink Sport Cola HI- SPOT Tahitian Treat " and "Canada Dry" brands of soft drink products has been eliminated;

s bottling (b) Competition between and among Canada Dry operations and its bottlers in the distribution and sale of Canada Dry soft drink products at the wholesale level has been eliminated; (c) Innumerable retailers and other customers have been deprived of the right to purchase "Wink Sport Cola HI-SPOT,' Tahitian Treat " and HCanada Dry" brands of soft drink products from the bottler of their choice at a competitive price; and (d) Consumers of "Wink Sport Cola, HI-SPOT Tahitian Treat " and "Canada Dry" brands of soft drink products have been deprived of the opportunity of obtaining such products in an unrestricted market and at competitive prices. (6) PAR. 8. Respondents' contracts, agreements, acts, practices and methods of competition aforesaid have had and may continue to have, the effect of lessening competition in the advertising, merchandising, distribution, offering for sale and sale of pre-mix and post-mix syrups and soft drink products; deprive, and may continue to deprive, the public of the benefits of competition in the purchase of soft drink products; and constitute unfair methods of competition and unfair acts or practices, in commerce, in violation of Section 5 of the Federal Trade Commission Act.

INITIAL DECISION BY THOMAS F. HaWVER, ADMINISTRATIVE LAW JUDGE JULY 22, 1981 On July 15, 1971, the Commission issued its complaints against Crush International Limited et a!., Dr. Pepper Company, The Seven- Up Company and Royal Crown Cola Co. These were mailed on July , 1971. The complaint against Norton Simon, Inc. and Canada Dry Corporation was issued on ~arch 3, 1972 and was mailed on ~arch CRUSH INT'L LTD. , E'I AL. qqO 428 Initial Decision , 1972. Respondents in these five cases were charged with violating Section 5 of the Federal Trade Commission Act for including territorial exclusivity" provisions in their licensing agreements with soft drink bottlers.

In view of the decision of the United States Court of Appeals for the District of Columbia in Coca- Cola Co. v. Federal Trade Commission 642 F.2d 1387 (D.C. Cir. 1981), complaint counsel has fied motions to dismiss these proceeding as to all respondents. Section 3.22(e) of the Rules of Practice provides that an initial decision shall be filed when a motion to dismiss is granted. Since it appears appropriate to grant complaint counsel's motion to dismiss, the following findings of fact and conclusions of law are hereby made: (3) FINDINGS OF FACT 1. Although, as indicated above, complaints were issued against these five respondents, the cases were never adjudicated. 2. These cases are companions to The Coca-Cola Co. Docket No. 8855, and Pepsico, Inc. Docket No. 8856, two matters fully adjudicated and decided by the Commission on April 7, 1978. (91 F. C. 517 and 680).

3. On September 19, 1978, then-assigned Administrative Law Judge Joseph P. Dufresne issued an order staying proceedings in these cases pending appellate review of the Commission s decisions in Coca-Cola and Pepsi.

4. In Coca-Cola Co. v. Federal Trade Commission the United States Court of Appeals, District of Columbia Circuit, set aside the Commission s order in Coca-Cola and Pepsi because they were based upon legal standards differing from those contained in the subsequently enacted Soft Drink Interbrand Competition Act. 15 U.8. 3501 et. seq. . The cases were remanded to the Commission for dismissal.

5. On April 1, 1981, the Commission ordered that these proceedings be dismissed without prejudice to any future proceedings under the standards of the Soft Drink Interbrand Competition Act. CONCLUSIONS Since the instant complaints are based upon the same superseded standards under which the Coca- Cola and Pepsico cases were decided, it is concluded that there is no presently existing public interest in continuing these matters, and that complaint counsel' motion should be granted.

Order 98 f' ORDER These cases are companions to The Coca- Cola Company, Docket No. 8855 and Pepsico, Inc. Docket No. 8856, two matters which the United States Court of Appeals for the District of (2)Columbia in Coca- Cola v. FTC, 642 F.2d 1387 (D.C. Cir. 1981), set aside because they were based upon legal standards differing from those contained in the Soft Drink Interbrand Competition Act, 15 UB. C. 3501 et seq. These companion cases were thereafter dismissed by the Commission without prejudice to any further proceeding under the standards of the Soft Drink lnterbrand Competition Act. In view of the action of the Court of Appeals, complaint counsel filed a motion before the Administrative Law Judge to dismiss these proceedings as to all respondents. The Administrative Law Judge filed his Initial Decision in these matters on July 22, 1981, dismissing the complaints as to all respondents, without prejudice to the Commission s right to institute new proceedings under the standards set forth in the Soft Drink lnterbrand Competition Act, should it determine that the public interest so requires.

Now it is hereby ordered that the Initial Decision and Order be and hereby is, effective immediately.

Commissioner Pertschuk did not participate. GEORGE IRVIN CHEVROLET CO. 447 447 Complaint