Final Judgment: U.S. V. Federal Pacific Electric Company, Et

U.S. v. Federal Pacific Electric. Co.

[¶ 70,617] United States v. Federal Pacific Electric Co. (H.K. Porter Company, Inc.). In the United States District Court for the Eastern District of Pennsylvania. Civil No. 28088, dated December 31, 1962. Case No. 1518 in the Antitrust Division of the Department of Justice.

Sherman Act Collusive Bidding- Restrictive Practices - Power Switching Equipment- Consent Judgment - A manufacturer of power switching equipment was prohibited by a consent judgment from submitting collusive bids, exchanging price information, fixing prices, discriminating in prices or terms of sale, refusing to sell products, tying-in sales of prod­ ucts, a.nd allocating markets. Also, the manufacturer was required to submit non-collusion affidavits with bids to governmental agencies and to review and determine its prices individually. See Department of Justice Enforcement, Vol. 2, ¶ 8834.10 For the plaintiff: Lee Loevinger, W. D. Kilgore, Jr., Baddia J. Rashid, Donald G. Balthis, John E. Sarbaugh, John J. Hughes, Attorneys, Department of Justice: For the defendant: Pepper, Hamilton & Scheetz, by Philip H. Strobing, for H. K. Porter Company, Inc. Final Judgment I GANEY, Circuit Judge [In full text]: Plain­ [Sherman Ad] tiff, United States of America, having filed The Court has jurisdiction of the subject its complaint herein on May 19, 1960, and matter of this action and of the defendant the plaintiff and the undersigned defendant, signatory hereto. The complaint states claims H K. Porter Company, Inc., by their re­ spective attorneys, having severally con­ upon which relief may be granted against sented to the entry of this Final Judgment that defendant under Section 1 of the Act without trial or adjudication of any issue of Congress of July 2, 1890, entitled "An of fact or law herein, without this Final act to protect trade and commerce against Judgment constituting evidence or an ad­ unlawful restraints and monopolies," com­ mission by any party signatory hereto with monly known as the Sherman Act, as amended. respect to any such issue, and this Court having determined pursuant to Rule 54(b) of the Federal Rules of Civil Procedure II that there is no just reason for delay in [Definitions] entering a Final Judgment as to all of plain­ As used in this Final Judgment: tiff's claims asserted in said complaint against the defendant signatory hereto. (A) "Power switching equipment" means Now, Therefore, before the taking of any all air-break switches rated in excess of testimony, without trial or adjudication 600 volts, including but not limited to dis­ of any issue of fact or law herein and upon connecting, grounding and interrupter switches, consent of the parties signatory hereto as the mechanisms used for operating such aforesaid, the Court hereby determines that switches, and the steel and aluminum struc­ the proceeding herein is terminated as to tures and bus supports used in outdoor sub- the defendant signatory hereto and directs stations; entry of Final Judgment as to all of plain­ (B) "Person" means any individual, part- tiff's claims herein against that defendant nership, firm, corporation, association, trustee (provided that the making and entry of this Final Judgment shall be without prejudice or any other business or legal entity; and to plaintiff filing and prosecuting claims (C) "Manufacturer" means a person who for damages, if any, resulting from activities manufactures or assembles, or proposes in alleged in the complaint herein) and as to good faith to manufacture or assemble, that defendant it is hereby within the United States in its own plant Ordered, adjudged and decreed as follows: regularly maintained for that purpose. U.S. v. Federal Pacific Electric Co.

III (D) Exchange information concerning [Applicability] prices, pricing methods or other terms and conditions of sale (other than information The provisions of this Final Judgment ap­ released to the trade generally) at or upon plicable to the consenting defendant shall which any power switching equipment or apply also to each of its subsidiaries, suc­ component thereof is to be sold to any cessors and assignees, and to their respec­ third person; tive officers, directors, agents, servants and (E) Submit noncompetitive, collusive or employees, and to all other persons in active rigged bids or quotations for supplying any concert or participation with such defendant power switching equipment or component who shall have received actual notice of this thereof to any third person; Final Judgment by personal service or other­ wise. Such defendant is ordered and di­ (F) Bid or quote, refrain from bidding rected to take such steps as are reasonably or quoting or communicate an intention to appropriate to procure compliance by its bid or quote or to refrain from bidding or subsidiaries, officers, directors, agents, serv- quoting or any power switching equipment ants and employees with the terms of this or component thereof to be sold to any Final Judgment. For the purpose of this third person; Final Judgment the consenting defendant (G) Hinder, restrict, limit or prevent any and its subsidiaries, officers, directors, agents, person from purchasing any power switch­ servants and employees, or any of them, ing equipment or component thereof from shall be deemed to be one person. This any third person (except as may result from Final Judgment shall not apply to or require any bona fide purchase or sale agreement, sales of power switching equipment for use without more); or outside the United States except for sales (H) Hinder, restrict, limit or prevent any of such equipment by the consenting de­ person from selling any power switching fendant to or for the use of the plaintiff equipment or component thereof to any or any instrumentality or agency thereof. third person (except as may result from any bona fide purchase or sale agreement, IV without more). [Practices Prohibited] V The consenting defendant is enjoined and [Refusal to Sell, Discrimination] restrained from directly or indirectly entering into, adhering to or claiming or main­ The consenting defendant is enjoined and taining any right under any contract, agree­ restrained from directly or indirectly: ment, arrangement, understanding, plan or (A) Communicating to or exchanging with program with any other manufacturer or any manufacturer or seller of any power seller of power switching equipment or com­ switching equipment any prices applicable to ponents thereof in the United States to: any power switching equipment or com­ ponent thereof except with. or after the ('A) Eliminate or suppress unreasonably release of such prices to the trade generally, competition in the manufacture, distribution or except in connection with bona fide or sale of power switching equipment or purchase or sale negotiations; components thereof; (B) Continuing to be a member of or (B) Allocate or divide territories, markets, participating in the activities of any as­ fields or customers for the manufacture or sociation or other organization with knowl­ sale of power switching equipment or com­ edge that any of the activities of such ponents thereof, provided, however, that association or other organization are being this subsection (B) shall not prohibit the carried on in a manner which, if the as­ consenting defendant from accepting or sociation or other organization were a con­ granting, without more, otherwise lawful senting defendant herein, would violate the patent, trade secret or technical information provisions of this Final Judgment; licenses; (C)(l) Refusing to sell or quote on, sub­ (C) Fix or maintain prices, pricing methods, ject to defendant's regularly established or any terms or conditions for the sale of terms and conditions of sale, any power any power switching equipment or com­ switching equipment to any manufacturer ponent thereof to any third person; of electrical equipment in which such power U.S. v. Federal Pacific Electric Co.

switching equipment is incorporated or to that the use intended to be made ot the which such power switching equipment is equipment or component will expose such connected, for incorporation in, connection defendant to a substantial 1·isk of liability, to or repair of such electrical equipment, nothing in subsections (C) and (D) of this and for general resale ·to others so long as Section V shall be deemed to prohibit such such power switching equipment is being defendant from requiring as a term of sale sold or offered for sale by such defendant that the purchaser agree in writing to hold to any other manufacturer of the same type such defendant harmless and to give a rea­ of electrical equipment for the same purpose; sonably adequate bond (or, at the pur­ (2) Refusing to sell or quote on, subject chaser's option, to maintain reasonably adequate to defendant's regularly established terms insurance) to secure such agreement insofar and conditions of sale, any component of as it relates to claims by third persons. any power switching equipment (which component is manufactured by or for the VI defendant) to any manufacturer of power [Price Review] switching equipment for incorporation in (A) The consenting defendant is ordered or for repair of such equipment and for general resale to others as a part of any and directed, not later than one year follow­ ing the effective date of this subsection (A), power switching equipment so long as such individually and independently (1) to review component is being sold or offered for sale by such defendant to any other such and determine its book prices for power switching equipment based upon lawful con­ manufacturer for the same purpose; siderations, and (2) to announce such prices . (3) Discriminating in any such sale by determined under (1) above; provided, how­ selling any such equipment or component ever, that the price review, determination in quantities, or at prices, terms and 'ton­ and announcement referred to above shall ditions of sale for the same quantities, not not be required with respect to any power at the same time available to other such switching equipment as to which such manufacturers; provided, however, that in defendant, within one year following the any suit or proceeding hereafter instituted effective date of this subsection (A), files by the plaintiff against such defendant charg­ with this Court, with a copy sent to the ing a violation of this subsection (3), such Assistant Attorney General in charge of the defendant may rebut a prima facie case made Antitrust Division an affidavit stating that by the plaintiff by showing that its lower such defendant, prior to the effective date price to a purchaser or purchasers was of this subsection (A) and subsequent to made in good faith to meet an equally low May 19, 1960, reviewed, determined and price of a competitor, or did not have the announced the price of the product in ac­ effect of substantially lessening competition; cordance with the requirements of this Provided that in any of the foregoing cases subsection (A); and provided, further, that any such prospective purchaser is financially nothing contained in this subsection (A) able, and is not delinquent in his account, shall prevent such defendant from deviating to purchase such equipment or component from, modifying, or otherwise changing the and such defendant is able in accordance prices announced in accordance with this with its usual and customary production subsection (A). and delivery scheduling procedures to supply (B) The consenting defendant is ordered such equipment or component to the pur­ and directed to send a copy of this Final chaser at or about the time requested by Judgment not later than one hundred and the purchaser; eighty (180) days following the effective (D) Conditioning the sale to any person date of this subsection (B) to each of the of any power switching equipment or com­ Federal, State and local agencies and any ponent thereof, as ordinarily sold (except other governmental awarding authorities to for repair or replacement purposes), by such which sales pursuant to bids for any power defendant to other persons in the same switching equipment were made by such commercial class, upon the purchase from defendant between January 1, 1958 and such defendant of any other item of electrical May 19, 1960, provided that the defendants equipment. consenting to a Final Judgment herein may Provided, however, in any instance in arrange collectively to send a single such which such defendant reasonably believes copy to each such purchaser to whicb such U.S. v. Federal Pacific Electric Co.

sales were made by one or more of ment with any person for a bona fide purchase such defendants. from or sale to each other, (C) The consenting defendant is ordered provided, that each party to the transaction and directed for a period of ten (10) years is free to sell or offer to sell on terms from the effective date of this subsection independently determined by it; (C) annually to notify each Federal, State and local governmental agency to which (B) Where required directly or indirectly such defendant has, within the preceding by a governmental agency, from formulating year, submitted a sealed bid for any power or submitting in combination with any switching equipment, that such defendant person a bona fide joint bid or quotation has been ordered, and such defendant is which is denominated as such or known to hereby so ordered for such period plus one the purchaser to be such; year, to submit a statement in the form set (C) From entering into, creating, carry­ forth in the Appendix hereto with each ing out or implementing by lawful conduct sealed bid for any power switching equip­ any otherwise lawful contract, agreement, ment submitted to such' agency in response arrangement, understanding, plan or pro­ to an invitation to bid which requests. such gram with any reseller relating to the sale statement. of any power switching equipment or (D) The consenting defendant is ordered components thereof purchased from the and directed, for a period of ten (10) years defendant; or from the effective date of this subsection (D) From lawfully contracting with any (D), when submitting a bid or quotation person for the supply to or by such person for the sale of any power switching equip­ of any power switching equipment or com­ ment (for which a price is included by such ponent thereof embodying the proprietary defendant in the calculation of its bid or design of, or specially designed for, the quotation) combined with other major items purchaser upon terms prohibiting the sup­ of electrical equipment, to set forth and plier from selling equipment embodying itemize separately the total amount included such design to all others (execpt that the in such bid or quotation for the ,power purchaser may authorize sales for repair or switching equipment. replacement purposes).

VII VIII [Permissive Provisions] [Inspection and Compliance] N.othing contained in this Final J udgment shall be deemed to prohibit the consenting For the purpose of determining or secur­ defendant, ing compliance with this Final Judgment, (A) Where in order to sell or offer to duly authorized representatives of 'the De­ sell electrical equipment which includes any partment of Justice shall, upon written re­ power switching equipment any person must quest of the Attorney General, or the have an item or items of electrical equip­ Assistant Attorney General in charge of the ment (i) which it does not itself manu­ Antitrust Division, and on reasonable notice facture or assemble to combine with items to the consenting defendant made to its of such equipment which it does itself principal office, be permitted, subject to any manufacture, assemble or purchase from legally recognized privilege: others, (ii) or if it does manufacture such ( 1A) Reasonable access during the office an item, the item is of such a type or quality hours of such defendant to all books, that it cannot competitively sell or offer to ledgers, accounts, correspondence, memo­ sell its own item, (iii) or where such person randa and other records and documents in could not singly perform the contract con­ the possession or under the control of such templated by any such sale or offer to sell: defendant relating to any matters contained (1) from formulating or submitting, in in this Final Judgment; and combination with any person, a bona fide (B) Subject to the reasonable convenience joint bid or quotation, where such joint bid of such defendant and without restraint or or quotation is denominated as such or interference from it, to interview officers known to the purchaser to be such; or or employees of such defendant, who ma.y (2) from conducting bona fide negotia­ have counsel present, regarding any such tions for or entering into any lawful agree- matters. The consenting defendant, upon written tiff to apply to this Court for the enforce­ request of the Attorney General or the ment of compliance therewith and the Assistant Attorney General in charge of the punishment of violations thereof. Antitrust Division, and upon reasonable notice made to its principal office, shall X submit such written reports, under oath if it is requested, with respect to any of the [Effective Date] matters contained in this Final Judgment All provisions of this Final Judgment as from time to time may be necessary shall become effective upon entry hereof. and requested for the enforcement of this Final Judgment. No information obtained APPENDIX by the means provided in this Section shall Affidavit be divulged by any representative of the Department of Justice to any person except The undersigned hereby certify to their a duly authorized representative of the best knowledge and belief that: Executive Branch of the United States ex­ (1) The bid to ...... cept in the course of legal proceedings to (name of recipient of bid) dated ...... which the United States is a party for the ha.s not been prepared by ...... purpose of securing compliance with this (name of defendant) in collusion with any Final Judgment, or as otherwise required other seller of power switching equiment, by law. If any such information is divulged and to a duly authorized representative of the Executive Branch, outside the Department (2) The prices, terms or conditions of of Justice, such information shall be given said bid have not been communicated by after notice to the defendant and on the the undersigned nor by any employee or condition that it will not be revealed to any agent of ...... person outside of such representative's De­ (name of defendant), to any other se1ler partment or Agency except where required of power switching equipment and will by regulation or statute or pursuant to court not be communicated to any such seller process. prior to the official opening of said bid, IX in violation of the Final Judgment in Civil No. 28088 entered by the United States Dis­ [Jurisdiction Retained] trict Court for the Eastern District of Penn- Jurisdiction is retained for the purpose of sylvania on ...... , 1962. enabling any of the parties consenting to Dated: ...... , ... . this Final Judgment to apply to this Court at any time for such further orders or directions as may be necessary or appro­ Signature of person responsible priate for the construction of or carrying for the preparation of the bid out of this Final Judgment, or for the modification of any of the provisions thereof, Signature of person supervising and for the purpose of enabling the plain- the above person, where feasible