United States v. Timken Roller Bearing Co.

Decision Date03 March 1949
Docket NumberNo. 24214.,24214.
Citation83 F. Supp. 284
PartiesUNITED STATES v. TIMKEN ROLLER BEARING CO.
CourtU.S. District Court — Northern District of Ohio

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Robert A. Nitschke, of Washington, D. C., and George L. Derr, of Cleveland, Ohio, for plaintiff.

Luther Day, of Cleveland, Ohio, and John G. Ketterer, of Canton, Ohio, for defendant.

FREED, District Judge.

The instant action was brought by the United States under favor of Section 4 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 4, to prevent and restrain the continuing violations of Sections 1 and 3 of the Act, 15 U.S.C.A. §§ 1, 3. Permanent injunction with adequate protection to prohibit the violations is sought.

The complaint charges, that the defendant and the co-conspirators entered into contracts, agreements and understandings to eliminate competition between themselves and with others, in the manufacture and sale of anti-friction bearings in all the markets of the world, including the United States. It recites that they allocated the respective territories in the world in which each party might manufacture and sell anti-friction bearings and that they prevented one party from selling or shipping anti-friction bearings into the territory allocated to any other party, except in completed articles of manufacture and for replacement bearings in those articles. It further charges that they fixed and agreed upon prices of bearings shipped into the territory allocated to any other party and that they fixed and agreed upon prices of anti-friction bearings sold and shipped to Russia. They allocated the use of the trade mark "Timken" to each of the parties in their respective designated territories and required that the co-conspirators not manufacture and sell bearings, except under the mark "Timken." The agreements required the co-conspirators to surrender to defendant the rights in the name "Timken" upon the termination of the contracts between them. It is claimed, in certain of the designated territories they entered into agreements with other manufacturers to regulate and allocate the sale of anti-friction bearings and they aided and assisted each other in restricting and eliminating in their respective territories competition from others in the manufacture and sale of anti-friction bearings.

It is alleged in the complaint that the combination and conspiracy resulted in unreasonable restraint of imports into and exports from the United States. It is further alleged that the current world shortage of anti-friction bearings and decreased European production caused by the war has created large potential export markets for anti-friction bearings of American manufacture. Notwithstanding this, the continuation of the conspiracy and combination will restrain and prevent defendant from seeking and acquiring many world markets with the eventual consequence of reducing its production of bearings and employment of labor.

The factual and legal questions to be determined in respect of the charges of the complaint are posed by the Government as follows:

Within the purview of the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note, is it illegal for the "defendant and two foreign corporations, which between them manufacture and sell a substantial portion of the world's production of anti-friction bearings, to regulate interstate and foreign commerce by private arrangements embodying the following restrictive practices?

"(a) Allocation, by agreement, of trade territories throughout the entire world, each agreeing with limited exceptions, not to manufacture and sell in the other's territory;

"(b) Imposition by agreement, of price restrictions upon products sold by any party in the territory of another;

"(c) Agreement to exclusively exchange present and future know-how and inventions, patented or unpatented;

"(d) Use, by agreement, of a common trade mark "Timken" in their respective territories, compulsory use of that mark by the foreign conspirators, prohibition against their dealing in products under any other name, and requiring that they cease using the name upon termination of the agreement;

"(e) Mutual co-operation and assistance to protect each others' markets and to eliminate the competition of outsiders;

"(f) Participation in foreign cartels which restrict exports by United States producers."

The defendant, The Timken Roller Bearing Co., is an Ohio corporation with its principal offices located at Canton, Ohio. It employs upwards of 16500 employees at its various plants located in Ohio and in Colorado, in the United States and St. Thomas, Ontario in Canada. Its foreign sales are handled by two wholly owned corporations: Timken Roller Bearing and Service, Limited, and The Timken Roller Bearing Co., of South America, Canadian and Ohio corporations respectively. Defendant manufactures tapered roller bearings, alloy steel, seamless tubing and removable rock bits.

British Timken, Limited, named a co-conspirator (hereinafter referred to as British Timken), is a British Joint Stock Company which maintains its plant and principal offices at Birmingham, England. It employs approximately 2400 workmen and manufactures tapered roller bearings and axle boxes for railroad cars. Its wholly owned subsidiary, Fischer Bearings Co., Ltd., manufactures straight roller bearings and ball bearings.

Societe Anonyme Francaise Timken, also named a co-conspirator (hereinafter referred to as French Timken), is a French corporation with its plant and offices at Asnieres, France. It employs approximately 510 people and manufactures tapered roller bearings.

The assertion of the Government that defendant, British Timken and French Timken dominate the tapered roller bearing market of the world and a substantial portion of the total anti-friction bearing market is challenged by defendant.

The evidence discloses that defendant is "many times over" the largest manufacturer of tapered roller bearings in the world. Its gross sales in 1947 were $77,097,756.00.

According to the figures complied by the Anti-Friction Bearing Manufacturers Association, defendant's percentage of the tapered roller bearing industry in the United States was as follows:

                              Year
                              1941        71.0%
                              1942        77.9%
                              1943        82.2%
                              1944        80.3%
                (7 months)    1945        78.9%
                

Presently defendant's output of tapered anti-friction bearings constitutes 25% of the total production of anti-friction bearings in the United States.

British Timken, during the period from 1927 to date, produced a large volume of all the tapered bearings in England. It manufactured more than 90% in 1927, the percentage decreased to 70%, and later returned to more than 90%. It produces approximately 20% of all the British anti-friction bearings. British Timken's sales including those made by its subsidiary, Fischer Bearings Co., Ltd., totaled $14,700,000 in 1947.

French Timken manufactures about 80% of the tapered bearings in France, which constitutes 10% of all the anti-friction bearings. Its sales in 1947 totaled $2,274,723.

Command of such volume of business spells out the dominant position of defendant, British Timken and French Timken both in the tapered and anti-friction bearing industry. Oxford Varnish Corporation et al. v. Ault & Wiborg Corporation, 6 Cir., 83 F.2d 764, U. S. v. Columbia Steel Co., 334 U.S. 495, 527, 68 S.Ct. 1107.

It was aptly stated during the trial that practically every shaft that turns and every vehicle that rolls is dependent on anti-friction bearings. Their crucial importance to our present industrial economy requires no demonstration. Modern machinery, such as trucks, automobiles, farm machinery, locomotives, aeroplanes, in fact every product which has rotating parts, relies on anti-friction bearings for continued operation.

Friction bearings and anti-friction bearings have distinctive characteristics. Friction bearings slide over the shaft and depend solely on oil or other similar substance to reduce friction. Anti-friction bearings, on the other hand, consist of a circular group of steel rollers or balls revolving between two circular raceways which reduce friction between moving mechanical parts.

There are two general types of anti-friction bearings: roller bearings and ball bearings. Tapered roller bearings are a style of roller bearings.

While tapered bearings compete with other types of anti-friction bearings and to a much lesser extent with friction bearings, tapered bearings, because of their design and applicability for particular use, enjoy freedom from competition, just as for certain definite uses, ball bearings are free from competition.

They constitute a distinctive type of anti-friction bearing which fulfills a requirement not supplied or satisfied by others. Whatever competition exists between the different types of anti-friction bearings, is present only up to the point of the adoption, in the design of a specific type of bearing in the proposed equipment or machinery. Once that particular type of bearing is incorporated, other types cannot be substituted for replacement. The replacement bearings must be of the same size and character.

The original installations constitute approximately 95% of the output of roller bearings and the replacement sales the balance of 5%.

In our highly mechanized industries, roller bearings serve as vital links in the chain of their assured existence and sustained progress. Defendant, British Timken and French Timken exercise a potent force in the making and marketing of these products, essential to the maintenance of the economic welfare of the United States and of the entire world.

In order to view the conduct of defendant in the proper perspective during the period of time when it is accused of violating the antitrust laws, it is essential to examine its prior activities which the Government claims culminated in the agreements, contracts and...

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