2. They have directly and indirectly through the offices and organization of Respondent Institute, and otherwise, collectively furthered their designs and plans to restrain, suppress, frustrate and lessen competition in the sale of steel products

(a) through agreements and collective action, including those particularized, set forth and alleged in Paragraph Seven;

(b) through discussions by representatives of Producer Respondents in group meetings where they have reached a meeting of their minds that it would be to the self-interest of each of the Producers Respondents to so act as to forestall increases in steel production facilities and acting thereafter in accordance with such understandings;

(c) through agreements, methods and practices with respect to making quotations to railroads;

(d) through taking collective and collusive action from time to time to promote the making of delivered price quotations by Producer Respondents to customers at any given destination and in the promotion of adherence to such quotations;

(e) through collective action with respect to resale price maintenance plans to further frustrate price competition and in so doing requiring jobbers to sell various steel products at the delivered price quotations adopted and specified by the Producers Respondents which were calculated in accordance with the basing point practices and methods referred to in Paragraph Four herein;

(f) through taking collective action for establishment of a classification of customers designated as "jobbers" and the designation of particular persons, firms and individuals to be listed within that classification as provided for in joint action by members of one or more of the various "groups" of Respondents referred to in Paragraph Seven herein;

(g) through collective action in establishing and maintaining uniform terms and conditions of sale, including free credit periods and maximum cash discounts for prompt payment.

3. They have collusively acted to prevent deviations from their collusively announced prices

(a) through the taking of collective action to prevent diversions of shipments in transit;

(b) through the taking of collective action to forestall and prevent reductions in railroad rates;

(c) through the taking of collective action to curtail fabrication in transit;

(d) through the taking of collective action to curtail price quotations on an f. o. b. mill basis when unrelated to or calculated in accordance with the basing point practices particularized in Paragraph Four; and

(e) through the taking of collective action to arrive at the establishment of uniform quotations on extras as is more particularly described, set forth and alleged in Paragraph Six.

Paragraph Four. Producer Respondents have followed and do now follow a planned common and cooperative course of action in their employment and use of basing-point practices, as hereinafter particularized, set forth, and alleged in this Paragraph Four. The practices involve the designating of a certain location or a limited number of locations as basing points for pricing purposes. Such locations will hereinafter sometimes be referred to as basing points. For each such basing point a factor "base price" is announced. Such factor will hereinafter sometimes be referred to as "base price" or "basing point price." The factor of "base price" thus used is announced by respondents as f. o. b. Pittsburgh, Pennsylvania, on some products. On other steel products with respect to a given delivered price quotation, the factor "base price," as announced by Producer Respondents, is announced as f. o. b. one or two or more locations (namely, a basing point) plus "freight applicator" therefor to said destination. Regularly, and in many instances, Producer Respondent produces steel at and make shipments from locations other than those designated and used as basing points in calculating the applicable delivered price quotations.

In calculating, arriving at and announcing delivered price quotations, Producer Respondents use a formula, including the factor "base price," and a factor designated by respondents as "freight rate." The latter factor, when used by Producer Respondents for pricing purposes, is taken from a compilation cooperatively and collectively produced by respondents through Respondent Institute. The factor thus designated by Respondents as "freight rate" is herein

sometimes referred to as "freight applicator." Thus, the delivered price quotations of Producer Respondents involve the use of a formula, namely, "base price" plus "freight applicator." The factor "freight applicator" thus utilized purports to represent the applicable freight rate on a given shipment. However, in no instance except by happenstance does it represent the sum of the applicable freight rate on a shipment by a Producer Respondent where the delivered price therefor was based on the basing point price f. o. b. a location other than that from which shipment was made. Furthermore, variances thus arising in many instances on some steel products occur because Producer Respondents making quotations in such instances have utilized the factor "base price" at a basing point plus the factor "freight applicator" supposedly representing freight charges from the basing point thus selected to the destination involved, although shipment is actually made from a production point much nearer freight-wise and at substantially lower actual transportation cost than the sum represented by said "freight applicator" used as a part of the formula for the delivered price. In other instances, Producer Respondents, although making shipments from one of the aforesaid basing points calculates delivered price quotations with respect thereto through the use of the formula of base price plus freight applicator applicable from an entirely different basing point than the point of shipment.

Paragraph Five: As a part of their common purpose and plan to lessen price competition, Respondents have agreed upon a common list of charges to be added to base prices in lieu of switching, shipping and freight charges. Such charges have been compiled and published by the Respondent Institute, ostensibly for the purpose of determining shipping charges, and are employed by the Producer Respondents in the calculation of delivered price quotations. Each Producer Respondent maintains a traffic department for determining actual shipping charges, including rates and routes. Such calculations are difficult and technical and traffic experts frequently differ as to the proper rate or route involved in a particular shipment. Such calculations often differ through changes in rates or routes which may not become known to different shippers at the same time. To avoid differences in delivered price quotations through employment of different rates, routes or switching charges by different Producer Respondents, the Respondents have employed in the calculation of delivered price quotations, only the rates which have been published and promulgated by the Respondent Institute. Thus, Institute freight rate books are in reality price books.

In computing and calculating their delivered price quotations in accordance with the aforesaid compilation or schedule of factors purporting to be all-rail freight rates and rail-ocean freight rates compiled and disseminated collectively through Respondent Institute, Respondents frequently assess and charge amounts for delivery that are higher than those available according to official published tariffs and frequently deny purchasers the benefit of lower rates otherwise available for water or truck haul; likewise, Respondents include in delivered price quotations arbitrary amounts in lieu of actual switching charges made by the railroads for switching cars, which said arbitrary charges Respondents have made available to themselves by collective collusive action through Respondent Institute and otherwise.

Paragraph Six: Producer Respondents produce and sell thousands of steel products which vary in size, shape, chemical composition, physical treatment and otherwise from one another. Thus, the potentiality for price competition among these Respondents is very great. To prevent this potential competition from finding expression and in furtherance of their general combination, Respondents have adopted common methods of pricing and selling their great variety of products as follows: They have collectively and collusively classified their products making certain products "base" products for pricing purposes, and variations therefrom "extras" or "deductions." An "extra" or "deduction" is any variation in quality, size, chemical composition, physical treatment or otherwise from the "base" product. They have collectively and concertedly classified 'extras" and "deductions" for pricing purposes and have concertedly and collusively established and maintained uniform prices for the aforesaid "extras" and "deductions," usually in terms of monetary amounts per hundred pounds or per pound or in terms of percent of the applicable base price factor. The said monetary amounts or percentum are added to or deducted from the applicable "base price" factor as provided for by the aforesaid collective and collusive action of Respondents. Respondents have also collusively and concertedly established and maintained a system of uniform "extras" and "deductions" applicable to size or quantity of shipment or services rendered.

96347-50-ser. 14, pt. 4b- -50

From time to time through agreement among themselves, Respondents have arbitrarily increased the price of "extras" by substantial amounts aggregating a high percentage of the "base" product price factor and without relation to the cost of the "extra" involved.

Paragraph Seven: For several years last past Producer Respondents have been conducting their business and carrying on their activities under an agreement embodied in a formal resolution adopted on June 6, 1935, by Producer Members of Respondent Institute representing more than 90 percent of the steel producing capacity of the country. Under the terms of said resolution, which ratified a similar resolution adopted by respondent Institute's board of directors on June 3, 1935, each of the Producer Respondents declared its intention of maintaining "the standards of fair competition which are described in the Steel Code." Said resolutions were adopted and have continued in effect after the invalidation of the National Industrial Recovery Act by the Supreme Court of the United States. Among other things said Code provided that "each member of the Code, by becoming such member, agrees with every other member thereof that the Code constitutes a valid and binding contract by and among all members of the Code.” The board of directors of respondent American Iron and Steel Institute was the Code Authority which was entrusted by Respondents with and exercised the functions of enforcing, administering, interpreting, and applying the provisions of the Code regarding "the standards of fair competition" incorporated therein. Said Institute, its board of directors, committees, and members have exercised similar functions since adoption of the aforesaid resolutions and have continued the Code in effect as a voluntary agreement among the members of the Institute. As recently as July 1947, the Institute was used by Respondents to collusively support an increase in the price of steel which the Producer Respondents had announced. Respondent Producers have continuously collaborated in the promotion, establishment and conduct within the membership of Respondent Institute of a number of separate groups each composed of members who produce and sell similar and competing kinds of steel products, and have promoted and held frequent meetings, conferred, and systematically exchanged and interchanged information among and between themselves to carry out a noncompetitive price policy. Many of the Producer Respondents are producers of more than one kind of sheet product and accordingly affiliated with more than one of the separate groups referred to. Among such groups are those composed of the respective producers of rolled steel products, rails, structural shapes, plates, bars, sheets, strips, tubular goods and wire products.

Paragraph Eight: Each of the Producer Respondents has contributed to the accomplishment of the acts and the effects flowing therefrom, as alleged in this complaint, by—

(1) Use of the basing point practices as particularized, set forth and alleged in Paragraph Four;

(2) The practice of discrimination between and among its customers by demanding, charging, accepting and receiving higher net prices from its customers located near its plant than from its customers more distantly located for goods of like grade, quality, and quantity, and whereby it is enabled to and does match its quotations on a delivered basis with the quotations of other respondent members;

(3) Action in quoting prices to customers located in the States of Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming, which are arrived at through the application of basing point practices as particularized in Paragraph Four, and in so doing quotes prices as though shipments were being made from mills east of the Rocky Mountains, although deliveries are actually made from mills west of the Rocky Mountains and in some instances near the location of the customer's business;

(4) Use of the compilations more particularly described, set forth and alleged in Paragraph Five;

(5) Use of the designations of "base products" for pricing purposes in the manner more particularly set forth and alleged in Paragraph Six;

(6) Use of compilations of "extras" or "deductions" more particularly de scribed, set forth and alleged in Paragraph Six;

(7) Acting in accordance with the understandings, agreements, plans, methods, policies, and practices more particularly described, set forth and alleged in Paragraphs Three and Seven.

Paragraph Nine: The inherent effects of the adoption and maintenance by the respondent members of the practices described and alleged in Paragraph Four herein and of the collective action alleged in subparagraph 3 (d) of Paragraph Three herein include all and singularly the following, to wit:

(1) Substantial lessening of competition among respondent members; (2) Unfair and oppressive discrimination against portion of the purchasing public in large areas by depriving such purchasers of the advantage which would otherwise accrue to them as a result of their proximity to the factories of respondent members, and by requiring such purchasers to pay increases over what the net prices to such purchasers would have been if such net prices had been fixed by competition among respondents; and

(3) Deprivation of equal opportunities for buyers to secure supplies of steel in times of short supply when respondent producers refuse to quote and sell f. o. b. mill.

Paragraph Ten: The combinations, agreements and understandings of the respondents and the acts, practices, pricing methods, systems, devices and policies as hereinbefore alleged, all and singularly, are unfair and to the prejudice of the public; deprive the public of the benefit of competition; promotion discrimination against some buyers and users of respondents' products; have a dangerous tendency and capacity to restrain unreasonably competition in the sale of such products in commerce; have actually hindered, frustrated, restrained, suppressed and prevented competition in such products in commerce; and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce, within the meaning of section 5 of the Federal Trade Commission Act, as amended.

WHEREFORE, the premises considered, the Federal Trade Commission, on this 13th day of November, A. D., 1947, issues this as its amended complaint against said respondents.

NOTICE

Notice is hereby given you, American Iron and Steel Institute, an incorporated trade association, its officers and directors; United States Steel Corporation and the following of its subsidiaries, American Bridge Company, The American Steel & Wire Company of New Jersey, Carnegie-Illinois Steel Corporation, Columbia Steel Company, Geneva Steel Company, National Tube Company, Tennessee Coal, Iron & Railroad Company, Virginia Bridge Company; Bethlehem Steel Corporation and the following of its subsidiaries, Bethlehem Pacific Coast Steel Corporation, Bethlehem Steel Company; Republic Steel Corporation and its controlled company, Truscon Steel Company; The American Rolling Mill Company and its subsidiary, Sheffield Steel Corporation of Ohio; National Steel Corporation, and the following of its subsidiaries: Weirton Steel Company, Great Lakes Steel Company; Inland Steel Company and its subsidiary, Milcor Steel Company The Youngstown Sheet & Tube Company; Jones & Laughlin Steel Corporation; Wheeling Steel Corporation; Colorado Fuel and Iron Corporation; Crucible Steel Company of America; Pittsburgh Steel Company; Sharon Steel Corporation; Alan Wood Steel Company; Acme Steel Co.; Agaloy Tubing Co.; Allegheny Ludlum Steel Corp.; American Chain & Cable Co., Inc.; Atlantic Steel Co.; The Atlantic Wire Co.; The Babcock & Wilcox Tube Co.; Bliss & Laughlin, Inc., Continental-United Industries Company, Inc.; Buffalo Bolt Co.; Bundy Tubing Co.; A. M. Byers Co.; The Carpenter Steel Co.; Central Iron and Steel Co.; Chicago Steel Wire Co.; Columbia Steel & Shafting Co.; Columbia Tool Steel Co.; Compressed Steel Shafting Co.; Connors Steel Co.; Continental Steel Corp.; Copperweld Steel Co.; The Cuyahoga Steel & Wire Co.; Detroit Steel Corp.; Henry Disston & Sons, Inc.; Eastern Stainless Steel Corp.; Edgewater Steel Co.; Empire Steel Corp.; Firth Sterling Steel & Carbide Corp.; Follansbee Steel Corp.; Fretz-Moon Tube Co., Inc.; Granite City Steel Co.; Griffin Manufacturing Co.; Harrisburg Steel Corp.; International Detrola Corp.; Joslyn Manufacturing & Supply Co.; Judson Steel Corp.; Keystone Drawn Steel Co.; Keystone Steel & Wire Co.; Laclede Steel Co.; Latrobe Electric Steel Co.; Lukens Steel Co.; The Mahoning Valley Steel Co.; The Medart Co.; Mercer Tube and Manufacturing Co.; The Midvale Co.; Moltrup Steel Products Co.; National Standard Co.; The National Supply Co.; Northwestern Steel & Wire Co.; Pacific States Steel Corp.; The Phoenix Iron Co.; Pittsburgh Tool Steel Wire Co.; Pittsburgh Tube Co.; The Pollak Steel Co.; Reeves Steel and Mfg. Co.; John A. Roebling's Sons Co.; Rotary Electric Steel Co.; The Standard Tube Co.; Superior Steel Corp.; Sweet's Steel Co.; The Thomas Steel Co.; The Timken Roller Bearing Co.; Universal Cyclops Steel Corp.; Vanadium-Alloys Steel Co., and its subsidiary Anchor Drawn Steel Co.; Vulcan Crucible Steel Co.; Washington Steel Corp.; Western Automatic Machine Screw Co.; Wheatland Tube Co.; Wisconsin Steel Co.; Worth Steel Co.; and Wyckoff Steel Co., Respondents herein, that the 19th day of December A. D. 1947, at 2 o'clock in the afternoon, is hereby fixed as the time and the offices of the Federal Trade Commission in the city of Washington, D. C., as the

place, when and where a hearing will be had on the charges set forth in this amended complaint, at which time and place you will have the right, under said Act, to appear and show cause why an order should not be entered by said Commission requiring you to cease and desist from the violations of the law charged in the amended complaint.

You are notified and required, on or before the twentieth day after service upon you of this amended complaint to file with the Commission an answer to the amended complaint. If answer is filed and if your appearance at the place and on the date above stated be not required, due notice to that effect will be given you. The rules of practice adopted by the Commission with respect to answers or failure to appear or answer (Rule VIII) provide as follows:

In case of desire to contest the proceeding the respondent shall, within twenty (20) days from the service of the complaint, file with the Commission an answer to the complaint. Such answer shall contain a concise statement of the facts which constitute the ground of defense. Respondent shall specifically admit or deny or explain each of the facts alleged in the complaint, unless respondent is without knowledge, in which case respondent shall so state.

Failure of the respondent to file answer within the time above provided and failure to appear at the time and place fixed for hearing shall be deemed to authorize the Commission, without further notice to respondent, to proceed in regular course on the charges set forth in the complaint.

If respondent desires to waive hearing on the allegations of fact set forth in the complaint and not to contest the facts, the answer may consist of a statement that respondent admits all the material allegations of fact charged in the complaint to be true. Such answer will constitute a waiver of any hearing as to the facts alleged in the complaint and the Commission may proceed to make its findings as to the facts and conclusions based upon such answer and enter its order disposing of the matter without any intervening procedure. The respondent may, however, reserve in such answer the right to other intervening procedure, including a hearing upon proposed conclusions of facts or law, in which event he may in accordance with Rule XXIV file his brief directed solely to the questions reserved.

Upon request made within fifteen (15) days after service of the complaint, any party shall be afforded opportunity for the submission of facts, arguments, offers of settlement or proposals of adjustment where time, the nature of the proceeding and the public interest permit, and due consideration shall be given to the same. Such submission shall be in writing. The filing of such request shall not operate to delay the filing of the answer.

IN WITNESS WHEREOF, the Federal Trade Commission has caused this, its amended complaint, to be signed by the Secretary and its official seal to be hereto affixed, at Washington, D. C., this 13th day of November A. D. 1947. By the Commission.

[SEAL]

WM. P. GLENDINING, Jr.,
Acting Secretary.

UNITED STATES OF AMERICA-BEFORE FEDERAL TRADE COMMISSION

Docket No. 2741

In the matter of American Sheet and Tin Plate Company; Bethlehem Steel Company; Canton Tin Plate Corporation; Columbia Steel Company; John Follansbee, George T. Ladd, and Isaac M. Scott, Trustees in Bankruptcy for Follansbee Bros. Company, a corporation; Granite City Steel Company; Inland Steel Company; Jones and Laughlin Steel Corporation; McKeesport Tin Plate Company; Republic Steel Corporation; The N. and G. Taylor Company; Washington Tin Plate Company; Weirton Steel Company; Wheeling Steel Cor poration; Youngstown Sheet and Tube Company

COMPLAINT

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 having reason to believe that American Sheet and Tin Plate Company, Bethlehem Steel Company, Canton Tin Plate Corporation, Columbia Steel Company, John Follansbee,