152 F.2d 161 (7th Cir. 1945), 8429, United States Maltsters Ass'n v. Federal Trade Commission

Docket Nº:8429.
Citation:152 F.2d 161
Case Date:November 24, 1945
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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152 F.2d 161 (7th Cir. 1945)




No. 8429.

United States Court of Appeals, Seventh Circuit.

Nov. 24, 1945

Russell Baker and Edward R. Johnston, both of Chicago, Ill., and William W. Corlett, of New York City, for petitioner.

Wm. T. Kelley and Walter B. Wooden, both of Washington, D.C., for respondent.

Before EVANS, SPARKS, and MAJOR, Circuit Judges.

MAJOR, Circuit Judge.

This is a joint and several petition to review a modified cease and desist order entered by the Federal Trade Commission on August 13, 1943. Petitioners consist of some eighteen manufacturers of malt (hereinafter sometimes referred to as the members or maltsters) and their trade association operating as United States Maltsters Association (hereinafter referred to as the association). The complaint alleged that the members on or about August 15, 1930, for the purpose of eliminating price competition among themselves, entered into, through and by the association 'an agreement, combination, understanding and conspiracy among themselves to fix and maintain and by which they have fixed and maintained, uniform delivered prices.' Voluminous testimony both oral and documentary was heard by the Commission. Findings of fact and conclusions were thereupon made by the Commission, upon which its modified order, now sought to be reviewed, is predicated.

The primary issue for decision is whether the findings of the Commission are supported by competent evidence, and especially the finding that petitioners by agreement and understanding effected a combination and conspiracy to restrain and suppress price competition. It is true numerous other

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contested issues are stated. Such issues, however, so we think, are merely incidental to the primary issue.

The association is an unincorporated, voluntary trade association formed in 1930 under the name of Bureau of Barley and Malt Statistics, which was changed in 1933 to United States Maltsters Association. Its membership includes more than a majority of the commercial maltsters in the country. The members as well as non-member maltsters are engaged in the manufacture of malt, which is sold principally to breweries. There are three recognized grades of brewers's malt- standard, choice and fancy. So far as need be noticed in the instant proceeding, malt is sold to distillers and breweries for the production of beer and other malt products. Both prior and subsequent to the organization of the association, such malt has been sold to breweries and others solely on a delivered price basis. Malting barley from which malt is made is largely grown in the four principal barley producing states, Wisconsin, Minnesota, North Dakota and South Dakota, and to a limited extent in the states of Iowa, Michigan and Illinois. It is purchased principally in the terminal markets of Minneapolis, Milwaukee and Chicago. Lesser quantities are purchased directly from farmers and county elevators.

Of the eighteen maltsters, members of the association, all are located in the state of Wisconsin or in the city of Chicago, Illinois, with the exception of four. Of these latter, one is located at Detroit, Michigan, two at Buffalo, New York, and one at Philadelphia, Pennsylvania, with its plant at Buffalo. Three of the Wisconsin maltsters have plants located in the state of Minnesota. The members represent approximately 64% of the total malting capacity of the United States, and approximately 75% of the malting capacity engaged in commercial malting. Approximately 77% of the total capacity of the members in the year 1939 was represented by malt plants located in Illinois and eastern Wisconsin.

A narration of the facts in detail would serve no useful purpose. Petitioners, as is ofttimes the case, seem to proceed on the theory that it is the function of this court to review the voluminous evidence in appraising the validity of the Commission's findings. As has often been stated, however, our function is limited solely to an inquiry as to whether the record furnishes substantial support for such findings. In making this inquiry, we are not permitted to weigh the evidence and it is of no consequence that we might disagree with the Commission's findings if the issues were presented to us as an original proposition.

Keeping in mind that the crucial issue arises as a result of the Commission's finding that petitioners by agreement or concerted action fixed the price at which their product was sold, we turn at once to that phase of the case. As might be expected, there is little, if any, direct proof of an express agreement. Such proof, however, is not necessary. The agreement may be inferred or implied from the acts and conduct of the parties as well as circumstances pertinent thereto. See Bigelow et al. v. RKO Radio Pictures, Inc., et al., 7 Cir., 150 F.2d 877, and cases therein cited, decided by this court August 3, 1945. In this connection, we note that petitioners assail certain testimony heard by the Commission consisting in the main of statements supposed to have been made by certain of petitioners concerning a price fixing agreement. The trial examiner in his report stated that he attached no importance to this line of testimony. The Commission agrees with the examiner and does not rely upon it in support of its findings. Such being the situation, we likewise ignore it.

As briefly as possible, we shall attempt to state the pertinent activities of the association and its members as they relate to a price fixing agreement. The association currently receives from its members daily reports of malt sales showing the date of sale, destination of shipment, grade and quantity of malt sold, and price received F.O.B. Chicago basis. This information is compiled by the office of the association on a daily sales report and sent to members, showing the name of the seller, the date sold, the quantity and grade, and the price received, without identification of the buyer or destination of the shipment. Weekly reports are received by the association from its member showing, for the week, total malt shipped, clean barley steeped, unfilled malt orders, unfilled commitments, malt stocks on hand, total barley on hand, in process and to arrive, barley purchases for the week, orders and commitments booked, malt orders and commitments

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cancelled and malt shipped to or for a reporting company by another maltster. This information is compiled by the office of the association on a weekly and cumulative report and sent to the members. Likewise, monthly reports of similar effect are prepared by the association and distributed to the members.

When a member of the association has offered for sale to such member's customers malt at a price different than that at which such maltster has theretofore been selling malt of a like grade, such maltster advises the office of the association, usually by wire, of such price, and thereupon the association office relays such information to the other members of the association, usually by telegram. When the price announced by a maltster for new crop malt is the first price announced for that season, such maltster advises the office of the association by telegram of the price at which he has quoted new crop malt to his customers, and this information is likewise relayed by such office by telegram to the other members of the association. Information as to the announcement by a maltster of a new price on malt is not sent to the office of the association until such maltster has actually offered malt at such new price to his customers.

Members of the association customarily hold a meeting once each month, usually in the city of Chicago. At these meetings general discussions are had as to matters of general interest to the industry. Such meetings are attended and advised by the firm of Stephenson, Jordan and Harrison, who are employed by the association for such purpose at a salary of $30, 000 per annum.

The members have at all times quoted and sold malt F. O. B. point of delivery or at delivered prices, and such delivered prices for the various grades of malt from November 16, 1938 to March 17, 1941 (two years and four months) have been identical. In reporting to the association, however, such prices were reported on an F.O.B. Chicago basis or, in other words, the price at which the malt would have been sold if such sales had been made F.O.B. Chicago. This reporting price, like the delivered price, has at all times been identical and uniform for the various grades of malt sold.

When an increase in price was announced by a member, its customers were notified and given an opportunity within a certain specified time to place orders at the previous or lower price. Upon notice of an increase in price by one member, all other members immediately notified their customers of such change in price and likewise gave their customers an opportunity to purchase at the previous price...

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