In the Matter of NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION, ITS OFFICERS, BOARD OF GOVERNORS, AND CERTAIN MEMBERS, SEPARATELY AND AS REPRESENTATIVES OF THE MEMBERS F. C. Jones, President, and Member of Board of Governors. W. J. Donald, Managing Director. T. W. Howard, Director, Uniform Accounting and Statistical Dept. C. M. Cogan, Director, Engineering Department; and all the members of its Board of Governors (the present personnel of said Board not being known to the Commission); and the following members of respondent association, separately and as representatives of the remaining members; American Electrical Works. American Steel and Wire Co. Bishop Wire and Cable Corporation. General Cable Corporation. Habirshaw Cable and Wire Corporation. Phelps-Dodge Copper Products Corporation. Triangle Conduit and Cable Company. FINDINGS AS TO THE FACTS AND CONCLUSION Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, on September 26, 1935, issued and served its original complaint in this proceeding and on November 16, 1935, issued and served its amended complaint in this proceeding upon the parties named in the above caption. It included said parties as respondents in this proceeding, both separately and as representatives of all the members of respondent association, charging them with the use of unfair methods of competition in violation of the provisions of said Act. After the issuance and service of said amended complaint respondents filed their respective answers thereto making general denial of the substantial allegations of said complaint. Subsequently all the respondents except Bishop Wire and Cable Corporation petitioned the Federal Trade Commission for permission to withdraw said answers and to file their substituted answers to the amended complaint, consenting therein that for the purposes of this proceeding all the material allegations of said complaint might be deemed to be admitted insofar as they relate to the business of selling power cable and "Safecote" rubber covered building wire. Pursuant to permission granted by the Commission said original answers were withdrawn by said respondents and said substituted answers were filed in lieu thereof. Said respondents also consented therein that the Commission might proceed to make its findings of fact without further proceedings and that an order to cease and desist might issue in the terms hereinafter stated. The said Commission, having duly considered the above and being fully advised in the premises, finds that this proceeding is in the interest of the public and makes these its findings as to the facts and its conclusions of the fact and law drawn therefrom. FINDINGS AS TO THE FACTS Paragraph One: Respondent National Electrical Manufacturers Association is a voluntary, unincorporated organization in which the principal manufacturers of copper cable and wire for electrical transmission have membership. For each of the various kinds of power cable and wire referred to herein the members of respondent association collectively produce, sell, and distribute the major part, and in some cases all, of the output of such commodities in the United States. The membership of respondent association consists of several hundred corporations, individuals, firms, and partnerships. At the time the amended complaint was issued and served the following corporate respondents were among the members of respondent association: American Electrical Works, Philadelphia, Pa. (a Rhode Island corporation) succeeded by Kennecott Wire and Cable Company through change of name; American Steel and Wire Co., Worchester, Mass. (a New Jersey corporation); Anaconda Wire and Cable Co., New York, N. Y. (a Delaware Corporation); Bishop Wire and Cable Corporation, New York, N. Y. (a New York corporation); Boston Insulated Wire and Cable Co., Boston, Mass. (a Massachusetts corporation); Crescent Insulated Wire and Cable Co., Trenton, N. J. (a New Jersey corporation); General Cable Corporation, New York, N. Y. (a New Jersey corporation); General Electric Company, Schenectady, N. Y. (a New York corporation); Habirshaw Cable and Wire Corporation, New York, N. Y. (a New York corporation); Kennecott Wire and Cable Company, Philadelphia, Pa. (a Rhode Islands Corporation) successor by change of name to American Electrical Works, National Electrical Products Corporation, Pittsburgh, Pa. (a Delaware corporation); The Okonite Company, Passaic, N. J. (a New Jersey corporation); Phelps-Dodge Copper Products Corporation, New York, N. Y. (a New York corporation); John A. Roeblings Sons Company, Trenton, N. J. (a New Jersey corporation); Simplex Wire and Cable Company, Boston, Mass. (a Massachusetts corporation); Triangle Conduit and Cable Company, Brooklyn, N. Y. (a New York corporation); United States Rubber Products, Inc., New York, N. Y. (a New Jersey corporation). The said respondent members, through the respondent association, have promoted, established, and utilized within said association, a number of separate groups and sections, each of which is composed of manufacturers who produce and sell similar and competing kinds of electrical wire and cable. A number of respondent members are manufacturers of more than one kind of the commodities referred to and accordingly affiliate themselves with more than one of the group and sectional organiaztions within respondent association, making separate contributions to the support of each such group. Among such groups are the respective manufacturers which produce impregnated paper cable, varnished cambric cable, rubber power cable, parkway cable, and rubber covered building wire. Paragraph Two: The power cable and wire to which these findings relate are used for the transmission of electric current of large voltages. Much of it is copper wire insulated by various processes to meet the special needs of various classes of customers. Impregnated paper cable is used for transmitting current from power house to substations and other outlets, where, depending on the use to which it is to be put, the current is diverted into varnished cambric, rubber power or parkway cable. Where used in buildings for lighting purposes, the current is distributed through what is known as building wire. Among the largest consumers of these commodities are public utilities, whether privately or publicly owned: municipal, state and federal governments for use in the light ng of streets, parks, highways, and public buildings; and large industrial plants and office buildings in carrying current for power and light. The respondent manufacturers specifically named in Paragraph One generally solicit, sell, and deliver these commodities directly to the larger consumers. Some of them supply the smaller requirements of such consumers and the entire requiremen's of the smaller consumers by selling and placing stocks of goods in the hands of jobbers and retailers. Said respondent manufacturers have control of a large, valuable, and continuous trade and commerce among the several states, and in the course of such trade and commerce ship, transport and deliver large quantities of material and finished products across state lines, or cause them to be so transported and deliv ered. To the extent that respondent manufacturers act collectively and collusively in the production and pricing of their goods they are in position to dominate the markets in which unorganized consumers must buy such goods. Paragraph Three: The respondent manufacturers specifically named in Paragraph One, by concerted action and agreement among themselves have adopted and put into effect the following policies, rules, practices and methods of competition: (a) As the first step in a plan to frustrate, suppress or restrain price competition, said respondents have promoted, established, and utilized subsidiary group and sectional organizations within respondent association, composed of manufacturers which, but for the facts herein found, would be in active competition with each other as to price and otherwise. (b) Sail respondents have promoted and held frequent meetings and conferences among the members of the various groups, sections, and subdivisions of the association, and have systematically exchanged price information among such members. In the course of such activities said respondent manufacturers have entered into agreements and understandings that they would quote, sell, and deliver their goods according to identical delivered prices, terms, and sales conditions determined by the joint or cooperative action of the members of the respective groups, sections or subdivisions of respondent association organized to have jurisdiction over such goods. Paragraph Four: As instances and illustrations of the methods used in carrying out the above plan and practice the Federal Trade Commission finds the following: (a) Said respondent manufacturers of impregnated paper cable, of varnished cambric cable, of parkway cable, and of rubber power cable, respectively, have concerted y a opted and maintained fixed and uniform selling prices on said commodities, under the leadership of and in cooperation with respondents The Okonite Co., the General Electric Co., and the Habirshaw Cable and Wire Corporation. The last-named respondents compiled, printed, and circulated among the other respondent manufacturers of said commodities exceedingly complex and detailed price lists, offering and assuring such other respondent manufacturers, their competitors, that if the latter would not quote and sell at less than the list prices of the respective compilers, then said compilers would maintain the prices in their respective lists and would immediately notify their said competitors of all proposed changes in price or in the methods of calculating same. Acting upon sail offers an assurances respondent manufacturers of said commodities systematically prepared, circulated, exchanged, adopted, and used, the price lists so compiled as the amount to be quoted to and obtained from their customers, for the purpose and with the effect of avoiding and suppressing price competition among all of respondent manufacturers of said commodities. (b) In the compilation, adoption, and use of said price lists, it was understood and agreed among said respondent manufacturers that no customer should be allowed to purchase except on a delivered price basis. Pursuant to such understanding and agreement, said price lists embodied and contained only delivered prices and the formula by which such prices were to be calculated. As to some products the price lists specified a single delivered price to be paid by all customers throughout the United States and including Panama Canal Zone, Porto Rico, Hawaiian Islands and Alaska. As to other products the price lists specified a single delivered price to be paid by all customers throughout and within each of a number of price zones, each composed of a number of States of the United States or parts of such States. The purpose of said delivered price policy was to prevent respondent manufacturers from allowing differences in the proximity of any given customer to their respective plants, to create any difference in the amount to be paid by him delivered from any source of supply. (c) For the purpose and with the effect of further suppressing price competition among themselves, respondent manufacturers of said commodities supplemented said uniform delivered price lists by imposing a uniform charge for the large wooden reels on which cable is wound for delivery and a uniform allowance for the return of such reels. Said price lists included a uniform charge for the return freight on such reels, which charge, in some cases, was more and in other cases less than the actual cost of such return freight to the plant of a given manufacturer. (d) For the purpose and with the effect of further suppressing price competition among themselves, respondent manufacturers of said commodities adopted uniform terms of sale, including uniform discounts for quantity and for prompt payment, uniform grades and specifications, and uniform methods of calculating prices on goods which varied from such uniform grades and specifications. (e) For the purpose and with the effect of further suppressing price competition among themselves, and more specifically for the purpose of ascertaining if, when, and to what extent any of respondent manufacturers had deviated in actual transactions from the identical delivered price or from any factor therein which their agreements and understandings required, respondent manufacturers of said commodities, with the advice, assistance, and cooperation of respondent association, adopted and carried on a system under which they agreed to report and did report to each other upon the request of any member of their respective groups, detailed information as to the prices and all factors enter ing into or affecting the prices which they had quoted on particular transactions. For a similar purpose and with a similar effect, respondent manufacturers have exchanged communications and held meetings and conferences at which investigations were made into cases of alleged price cutting and where any such offenders were criticized or otherwise disciplined by their competitors. (f) As an incident to and a necessary result of said delivered price policy respondent manufacturers habitually and systematically discriminated in price among their various customers after making due allowance for the cost of transportation, extracted higher prices from customers having little or no transportation expense, and accepted lower prices from those having heavy transportation expense. As a further result of said delivered price policy, customers located at or near the place of manufacture and shipment were deprived of the advantage of such location and were required to contribute to the cost of transportation of more distant customers, notwithstanding that such customers frequently were in competition with each other. As a further result of such policy, respondent manufacturers charged and collected from many of their customers, in the guise of transportation and delivery charges, more, and from other of their customers, less, than the actual cost thereof. Paragraph Five: Said respondent manufacturers of rubber covered building wire, through cooperative group activities within respondent association, have fixed the selling price of a patented kind of such wire known as "Safecote”, under cover of a licensing contract between themselves as licensees and respondent National Electrical Product Company as owner of the patent and licensor. Said respondents, including both the licensees and licensor, are competitors of one another. They have first jointly determined upon an identical price which they desired to obtain from their respective customers and then went through the formality of having such price named and imposed by respondent licensor on respondent licensees under said contract. Paragraph Six: Said respondent manufacturers of the commodities named in Paragraphs Four and Five herein have adopted identical discounts from their published list prices to cover sales to jobbers and have required of jobbers that they re-sell said commodities at the list price in order that there may be no price competition among their respective jobbers or between the jobbers and manufacturers respectively, supporting such requirement by jointly determining the status and eligibility of jobbers, by detection of failures on the part of jobbers to maintain the prescribed resale price, and by refusal to supply goods to such jobbers. Paragraph Seven: Some of the above-described agreements, understandings, policies, and methods of avoiding, frustrating, and supressing price competition have been carried on continuously since 1929 or longer, but respondent associa tion, as Code Authority to administer the code adopted by the industry under the National Industrial Recovery Act, used, interpreted, and applied various provisions of said Code for the purpose and with the effect of supporting, supplementing, and reinforcing such agreements, understandings, policies, and methods. Paragraph Eight: By means of the agreements, understandings, rules, policies, and cooperative methods described above in Paragraphs Four to Seven, inclusive, respondents have taken away from purchasers of power cable and rubber-covered building wire, the advantages of normal competition which formerly existed and would otherwise exist among respondent manufacturers. Respondents thereby compelled unorganized purchasers to purchase such commodities at prices and on terms determined collectively and collusively by respondents and artificially enhanced the amounts exacted from such purchasers above the amounts obtainable had there been no such determination. The amounts so exacted from public utilities whether publicly or privately owned and from municipalities and the government as an incident to the transmission of electric light and power, in some cases became a part of the permanent investment on which consumers of electricity are called upon to pay a continual return, or if publicly owned, at least sufficient to retire the investment in such utilities. In other cases the amounts exacted became a part of utility and government operating expenses which must be borne by the consumers and rate payers. CONCLUSION By reason of the admitted agreements, understandings, rules, policies, and cooperative methods described above in Paragraphs Four to Seven, inclusive, the respondent association and members named in Paragraph One have been and are engaged in a wrongful and unlawful combination, conspiracy, and agreement in and affecting trade and commerce throughout the United States and its possessions, in power cable and rubber-covered building wire, for the purpose and with the effect of unduly and unreasonably restricting, restraining, and obstructing competition in the sale of such goods; which acts and things and methods of competition are all to the injury and prejudice of the public engaged in the purchase or purchase and resale of electric power cable and rubber covered building wire, of competitors engaged in the production and sale thereof, and of consumers of electricity; and constitute unfair methods of competition in interstate commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. At a regular session of the Federal Trade Commission, held at its office in the City of Washington, D. C., on the 29th day of December A. D. 1936 COMMISSIONERS: Charles H. March, Chairman, Garland S. Ferguson, Jr., Ewin L. Davis, William A. Ayres, Robert E. Freer. In the matter of National Electrical Manufacturers Association et al ORDER TO CEASE AND DESIST This matter coming on to be heard by the Commission on the complaint filed herein on September 26, 1935, the amended complaint filed herein on November 16, 1935, and the proposed substituted answers of the respondents, National Electrical Manufacturers Association, F. C. Jones, as President and Member of the Board of Governors, W. J. Donald, as Managing Director and C. M. Cogan, as Director of the Engineering Department of National Electrical Manufacturers Association and American Electrical Works (now known as Kennecott Wire and Cable Company), American Steel and Wire Co., Anaconda Wire and Cable Co., Bishop Wire and Cable Corporation, New York, N. Y., (a New York corporation), Boston Insulated Wire and Cable Co., Crescent Insulated Wire and Cable Co., General Cable Corporation, General Electric Company, Habirshaw Cable and Wire Corporation, National Electrical Products Corporation, The Okonite Company, Phelps-Dodge Copper Products Corporation, John A. Roebling's Sons Company, Simplex Wire and Cable Company, Triangle Conduit and Cable Company, United States Rubber Products, Inc., in which they state that they desire to and have hereby waived hearing on the charges set forth in the amended complaint insofar as the same refer to alleged unfair methods of competition in commerce within the intent and meaning of Section 5 of the Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes" and that they and each of them for the sole purpose of avoiding the trouble and expense incident to further continuation of this proceeding refrain from contesting the proceeding, and that they and each of them consent that all the material facts alleged in said amended complaint in so far as the same are connected with the business of selling or offering for sale impregnated paper cable, varnished cambric cable, rubber power cable, parkway cable and "Safecote" rubber covered building wire may be deemed to be admitted as alleged unfair methods of competition in commerce within the intent and meaning of Section 5 of said Federal Trade Commission Act but not within the intent and meaning of any other law of the United States, such proposed substituted answers not constituting an admission of any conclusions of law and not constituting an admission of fact for any other purpose nor to be used against them in any other proceeding, suit, or action, and that they and each of them consent that the Commission may without trial and without fur 96347-50-ser. 14, pt. 4b-48 |