United States v. FMC Corporation
| Decision Date | 22 August 1969 |
| Docket Number | Civ. A. No. 37123. |
| Citation | 306 F. Supp. 1106 |
| Parties | UNITED STATES of America, Plaintiff, v. F M C CORPORATION, Defendant. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
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Donald G. Balthis, John W. Neville, Jon D. Hartman, L. Barry Costilo, Attys., Dept. of Justice, Antitrust Div., Philadelphia, Pa., for plaintiff.
Drinker, Biddle & Reath, by Lewis H. Van Dusen, Philadelphia, Pa., Sullivan & Cromwell, by Wm. Piel, Jr., John E. Donnelly, David L. McLean, New York City, for defendant.
In this civil action the plaintiff, the United States of America, seeks to restrain and enjoin alleged violations of Section 1 of the Sherman Antitrust Act by the defendant, FMC Corporation (hereinafter FMC). Briefly summarized the complaint charges that, beginning in at least 1955, FMC and several other members of the so-called "chlor-alkali" industry engaged in a combination and conspiracy, which had as its object the elimination of price competition in the sale of chlorine, caustic soda and soda ash. The conspiracy is alleged to have taken the form of meetings, informal discussions, telephone calls and written correspondence. The complaint further alleges that the effect of the combination and conspiracy has been to unreasonably restrain interstate commerce by restricting and controlling competition among the co-conspirators; and the plaintiff therefore prays the Court to issue an injunction prohibiting further activities in pursuance of the conspiracy.
The principal manifestations of the conspiracy were alleged to be:
(1) Discussions and communications among the alleged conspirators leading to agreements to raise the prices of chlorine, caustic soda and soda ash in 1955 and 1956; of dry caustic soda in 1958; and of chlorine in 1960.
(2) Collusive efforts in 1958 and 1960 to maintain at an artificially high level the previously (1956) fixed list price of liquid caustic soda, by means of tacit agreements to restrict discounts to selected industries and users.
(3) Collusive attempts to maintain and perfect the freight equalization system used by the industry from a period of at least 1954 through 1958;
(a) by conspiring not to recognize Linden, New Jersey, as an equalization point for chlorine and caustic soda;
(b) by exchanging truck and barge rates which were not public information;
(c) by agreeing on minimum quantities which would entitle customers to lower barge rates; and
(d) endeavoring to eliminate any disparities in practice which might detract from the quotation of identical freight rates.
The complaint as originally filed on December 24, 1964, named as defendants FMC and eight other chlor-alkali producers. But, prior to trial the eight defendants other than FMC entered into consent decrees with the plaintiff, thereby settling the proceedings against them, without however admitting the substantive allegations of the complaint. FMC, as it had the right, elected to go to trial, denying in all material respects the allegations of the complaint.
The case was tried by the Court without a jury in a trial which lasted nineteen days. Diligent effort by counsel for both sides resulted in several stipulations which greatly facilitated the presentation of documentary evidence, thereby expediting trial of the issues.
At trial an issue arose concerning the admissibility as substantive evidence in this case of testimony given by one of the plaintiff's key witnesses before a federal grand jury which investigated the chlor-alkali industry in 1961 and 1962, but failed to bring indictments. The court denied the plaintiff's motion to introduce the testimony as substantive evidence of the matters asserted therein under the past recollection recorded exception to the hearsay rule; but so that, if the case is appealed, the reviewing court may have the benefit of knowing what the court's findings would have been had the testimony been admitted into evidence, the court, pursuant to Rule 43(c), F.R.Civ.P.,1 and by agreement of counsel, made additional alternative findings based upon the excluded testimony.
The court, after giving careful consideration to the pleadings and evidence, including exhibits and stipulations, the memoranda and briefs submitted by the parties, and the oral arguments of counsel, concludes that, with respect to certain elements charged in the complaint, the Government has sustained its burden of proving that there existed a combination and conspiracy which had as its purpose and effect the elimination of price competition in the sale of chlor-alkali products; but as to other elements of the complaint the Government failed to sustain its burden. In support of that holding, the Court now makes the following Findings of Fact and Conclusions of Law, separately stated.
(1) Defendant FMC Corporation is organized and exists under the laws of the State of Delaware and has its principal place of business and main office in San Jose, California.
(2) Jurisdiction of the subject matter duly appears and proper venue of the defendants is not contested.
(3) Except as otherwise stated or required by context, the facts herein found occurred or existed within the period from January 1, 1955 to December 24,
1964 (hereinafter referred to as the "period covered by the Complaint"), and occurred or existed within, and are limited to, the area of the Continental United States generally east of the Rocky Mountains.
(4) The three "chlor-alkali" commodities —chlorine, caustic soda and soda ash —to which the allegations of the complaint refer, are sold and shipped in interstate commerce by the defendant FMC Corporation and by the other producers thereof with whom FMC competes in such commerce.
(5) Although dismissed as parties to this action the eight other former codefendants listed below were alleged by the government to be co-conspirators with FMC, and, for purposes of brevity, will be referred to hereinafter by the following abbreviated terms:
Allied Chemicals Corporation ...................Allied
Diamond Alkali Company ........................Diamond
Dow Chemical Company ..............................Dow
Hooker Chemical Corporation ....................Hooker
Olin Mathieson Chemical Company ..................Olin
Pennsalt Chemicals Corporation ...............Pennsalt
Pittsburgh Plate Glass Company ......Columbia Southern2
Wyandotte Chemicals Corporation .............Wyandotte
(6) As it has been used throughout the trial pursuant to the stipulation of the parties, the term "list price" as used in these findings means the sellers F.O.B. plant price for sales in the area of the Continental United States generally east of the Rocky Mountains, exclusive of freight charges, as announced by the seller (and this verb as herein used shall mean announced, publicized, circulated or made available to its sales personnel for open quotation) by one of the following means:
(a) Distributing to the trade generally sheets setting forth the price lists;
(b) Informing the trade press, such as the "Oil, Paint and Drug Reporter", of its list prices; or
(c) Distributing to its own sales organization an internal price book or price book sheet setting forth the list prices with authority to its salesmen to quote such prices openly and generally.
(7) The principal products of the chlor-alkali industry, and those involved in the present action, are chlorine, caustic soda and soda ash. The products are basic industrial chemicals having a wide variety of uses.
(8) Chlorine is one of the chemical elements. While there are chemical processes for the recovery of chlorine from various of the compound forms in which it occurs in nature, about 93% of the commercially produced chlorine in recent years has been produced by the electrolysis of ordinary salt (NACL). Salt brine is placed in "cells" through which an electric current is passed, resulting in the decomposition of the salt and the production of chlorine gas, some hydrogen gas and a solution of caustic soda (NAOH). By this process, the production of one ton of chlorine is accompanied by the production of 1.1 tons of caustic soda.
The cells used in the electrolytic process are of various designs, improvements having been introduced and licensed to others by Hooker, Diamond Alkali, Columbia Southern and Dow. A predecessor of the Olin Mathieson Chemical Corporation introduced a mercury cell which has been extensively used in recent expansions of electrolytic chlorine production because the caustic soda it produces may be used directly in the rayon industry without further purification.
Among other uses, chlorine is utilized in water purification, bleaching, pulp and paper, general germicides and deodorants and in the manufacture of inorganic chlorides.
(9) Caustic soda (Sodium Hydroxide —NAOH) is co-produced with chlorine in the electrolysis of salt, in the proportion of 1.1 tons of caustic soda to one ton of chlorine. This method has steadily replaced the former common method of producing caustic soda by the reaction of slaked lime (calcium carbonate) with soda ash (sodium carbonate), until by 1965 it was estimated to account for 98% of the caustic soda produced. In the electrolytic process an electric current is passed through a salt brine solution in specially designed cells. The salt brine is decomposed by the current to form a 10% to 12% sodium hydroxide solution, with hydrogen gas forming at the cathode and chlorine gas at the anode as co-products. Further processing of the sodium hydroxide solution removes impurities and residual undecomposed salt and some of the water so as to produce a concentrated solution of 50% or 70%-74% sodium hydroxide. For general industrial purposes, the recognized grades are "commercial" and "rayon".
Liquid caustic soda is used, among...
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