to the plaintiff. Zinnsmaster maintains that, in December 1966, Continental effectively started a price war. From that time forward Continental substantially reduced its wholesale prices on major bread products. Zinnsmaster met each price reduction soon after it was initiated. In hopes of off-setting losses due to the lower prices, Zinnsmaster introduced in 1967 a new commodity, the split-top loaf. Less than two months later, Continental also began to offer the consumer a split-top loaf but at 7 cents less per loaf than the Zinnsmaster brand. Zinnsmaster was forced to discontinue production of the split-top loaf.

At all relevant times, Continental was charging higher prices for identical products in nearby markets. The complaint maintains that in this way, Continental was able to charge uneconomical, below-cost prices in the metropolitan area and subsidize the losses incurred with profits made in the less competitive, outlying markets. The local bakers were unable to do so for obvious reasons.

Zinnsmaster estimated its damages at $700,000 over the course of the complaint period. The case was settled without hearing and a mutual consent decree barred price discriminations for four years. In 1971, William Inglis and Sons Baking Company et al., a group of independent bakers in the San Francisco area filed a complaint against ITT-Continental, Campbell-Taggart, American, and Interstate Brands Corporation (the four largest bakers in the country) and their various subsidiaries.14 The plaintiffs were and are seeking relief for damages in connection with an alleged conspiracy to eliminate competition through predatory behavior. The complaint maintains that as early as 1950 the following tactics were used by the defendants: They initiated price wars and sold below cost in the relevant market for up to a year at a time; they charged discriminatory prices in other markets and were able to offset local losses in the way described above; they made concessions to large volume customers in several ways, by (a) making supply agreements with grocery chains at a price fixed on a multi-regional basis (these agreements did not take into account the distribution cost differential); (b) giving discounts in return for preferred shelf-space; (c) making direct cash payments for exclusive supply rights; (d) making frequent attempts, with some success, to acquire independent bakers, financially weakened by the unfair competition; (e) misrepresenting the plaintiffs and others to potential customers as being financially unstable.

During the complaint period a number of baking concerns were forced out of business, including a plant operated by Inglis and Sons. The plaintiffs estimated at the time of the complaint that their combined damages amounted to approximately $15 million. The case is pending. A motion by the plaintiffs for a preliminary injunction has been denied and is on appeal.

In 1973, an Appeals Court affirmed the decision of a lower court which had decided against ITT-Continental in a complaint brought by Old Homestead Bread Company.15 At the beginning of the time period covered by the complaint, Old Homestead had been one of the four principal bakery product wholesalers in the Denver/southeastern Wyoming market area. In 1962, Continental built the largest baking plant in the Rocky Mountain area which was initially in operation at

14 William Inglis and Sons et al. v. ITT-Continental et al., N.D. California, Complaint filed October 1971. 15 ITT-Continental v. Old Homestead Bread, Tenth Cir. 476 F2d 97 (1973).

approximately 50 percent capacity. A Continental official testified that the plant would not be functioning profitably until it reached at least 75 percent capacity and that the company was aware of this fact at the time of construction. In 1974, Continental signed an agreement with a new corporation called 5 States Supply Co., an organization consisting of those members of Associated Grocers who wished to be supplied with Continental products. By the agreement, Continental received preferred shelf space in 5 States member stores in return for supplying its private label brand to those stores at 1 cent less per loaf than the trade name brand. As required by the bylaws of the new supply company, the private label brand was to be sold at the same retail price as the trade name brand. Judging by the average price of a standard 11⁄2-pound loaf of white pan bread in Denver in 1965, 31 cents, 5 States members saved over 3 percent in bread sales volume over non-members.

By this arrangement Continental took a sufficient amount of business from Old Homestead (1963 sales figures-$4,118,938; 1967 sales figures-$906,445) that the company was forced to go out of business December 31, 1967. On the next working day, Continental raised its prices and did away with all discounts.

During the 1963-67 period, Continental had increased its market share from 35 percent to 51 percent. The new plant had exceeded 75 pecent capacity and was in the black.

The court felt that there were reasonable grounds to conclude that Continental had both built its plant and entered into the 5 States agreement with "predatory intent." Old Homestead was awarded over $1 million damages.

A comprehensive complaint against ITT-Continental was issued in December of last year charging predatory pricing charges.16 The complaint maintains, as one of many charges, that the central office of the company sets goals which force local managers to engage in predaory acts. A list of seven particular tactics in pricing includes subsidizing losses in highly competitive markets with profits from other markets and other less competitive products, e.g. snack cakes. c. Price-fixing

The FTC has brought one action against members of the baking industry involving price-fixing charges, In the Matter of Bakers of Washington." Bakers of Washington was an association of wholesale baking concerns throughout the State of Washington. It was organized in 1936. During the complaint period, 1957 to 1960, Continental was an influential member. Meetings were held at least every two weeks. In the early summer of 1968, discussions at these meetings concerned rapidly rising labor costs and the need to raise prices. On August 11, all members of Bakers imposed identical increases.

The Secretary of Bakers repeatedly contacted cut-rate bakeries to advise them of the benefits of joining bakers and keeping prices stable. Members who heard of an "unsatisfactory" price contacted the Secretary, presumably so he could apply some pressure.

At no time was a price decrease joined in by member bakers. No decrease in price lasted long; this was the purpose of the conscientious and persuasive efforts of the Secretary.

16 FTC Docket No. 9000.

17 FTC Docket No. 8309.

The Commission concluded that there was something more than conscious price parallelism or strong price leadership going on. As of December 1964, members were required to dissolve Bakers of Washington and to cease and desist from any further restraint of trade. They were also barred from organizing any other similar trade association.

The following actions involving price-fixing charges have been brought by the Department of Justice against members of the baking industry.

In 1961 the Government brought criminal charges against six baking companies supplying the Florida market, among them, American and Ward, which are national firms.18 The companies controlled about 75 percent of the bread market in Florida. The Government had reason to believe that representatives of the companies had met in April 1960, and agreed to impose simultaneous price increases. The alleged conspiracy had continued until the date of the complaint, March 6, 1961. Following entry of nolo contendere pleas, fines totalling $24,000 were imposed on April 11, 1961.

Another indictment filed on the same day named the same two national companies along with two regional bakers.19 The criminal action and a companion civil suit charged the bakers with fixing bread prices in the Jacksonville area since September 1957, and rigging bids for supply business to local naval installations. The combined share of the Jacksonville market controlled by the defendants was 90 percent. On nolo contendere pleas the bakers received fines totalling $21,000 on April 11, 1961. The civil suit was settled on September 1, 1965, by a consent decree payment of $44,000 in damages to the Government.

In 1962, the Government brought civil and criminal charges against six companies, one national (Ward) and five local in the PhiladelphiaTrenton area.20 The indictment named executives of the companies as additional defendants. The accused were charged with fixing prices on economy bread (i.e., lower priced secondary trade name brands) starting in April 1960. They allegedly used threats and predatory pricing to maintain the conspiracy in the following way: When a local bread distributing company refused to sell at the agreed-upon price and entered into a contract with an outside supplier, the conspirators threatened the supplier with a price war in its own market. If necessary they subsequently followed through on the threat.

On nolo pleas, four of the defendant corporations and the individuals associated with them were fined a total of $33,500. One defendant company and two individuals were found guilty and fined a total of $10,200. The only national company involved, Ward, was found not guilty. All the judgments in the criminal action were entered in 1963. During 1964 all defendants except Ward entered into consent judgments and so brought the civil action to a close.

18 United States v. American Bakeries Company; Flowers Baking Company, Inc.; Fuchs Baking Co.; Holsum Bakers, Inc.; Southern Bakeries Company; and Ward Baking Company; Criminal No. 11676 J, complaints filed March 6, 1961, in the U.S. District Court for the Southern District of Florida.

10 United States v. Ward Baking Company; American Bakeries Co.; Deret Baking Company; Flowers Baking Company, Inc., and Southern Bakeries Company; Criminal No. 11677 J, complaint filed March 6, 1961, in the U.S. District Court for the Southern District of Florida.

20 United States v. Ward Baking Company; Fleischmann's Vienna Model Bakery; Frankford Grocery Co.; Leo Rossi Baking Company; Schulz Baking Company; Strochmann Brothers Company; Oscar Doyle; F. W McCarthy; Herman Heim; Theresa Rossi; Charlie Schulz, Sr.; Leonard V. Thompson; and Theo Staab, Criminal No. 21123, complaint filed June 27, 1962, in the U.S. District Court for the Eastern District of Pennsylvania.

Civil charges were brought against Arnold Bakers, distributor companies of various individual wholesalers and subdistributors in 1962.21 Since 1946, Arnold had been operating a distribution scheme which systematically produced non-competitive prices, the Government charged. Distributors were granted exclusive territories with the agreement that they would sell only Arnold products. The territorial allocation was done on a long-term basis, so long-term, in fact, that territorial rights could be left to another individual on retirement or death of a distributor.

In the final judgment of August 3, 1970, Arnold entered into a consent decree requiring the company to put an end to the arrangement and barring any similar schemes in the future.

In companion civil and criminal actions, instituted in 1967, three national companies, American, Continental, and Ward, plus two regional bakers, were charged with fixing prices in the Akron-CantonCleveland-Mansfield market in the State of Ohio.22 The defendants were the principal wholesalers of bakery products in that market. The alleged conspiracy began sometime before 1964 and involved fixing bread prices and rigging institutional bids. The firms allegedly had fixed prices by agreeing to simultaneously eliminate established discounts to customers. A consent decree was entered September 8, 1969; following nolo pleas criminal fines of over $1 million were imposed.

În 1967, four national bakers, American, Continental, Rainbo of Saginaw (a subsidiary of Campbell-Taggert), and Ward were charged in civil and criminal complaints along with nine regional bakers and a State trade association.23 The sales of the defendants represented a substantial part of all baked goods sold in Michigan. The alleged conspiracy had begun at least as early as January 1964, and continued until October 1966. The conspirators had fixed prices at non-competitive levels, eliminated discounts and arbitrarily allocated supply accounts among themselves. Consent decrees were entered in 1969. In the criminal action, pleas of nolo were at first rejected by the court but subsequently accepted. Defendants ultimately received suspended jail sentences, probation and fines in the amount of $211,500.

In 1971, a consent decree was issued against three national companies, General Host Company, Continental, and Ward and four regional bakers, among them Stroehmann Bros., which had also been a defendant in the earlier Philadelphia case described above.24 Both Ward and Stroehmann Bros. were charged with the same offense from which they had been barred by a consent decree seven years earlier. Fines imposed in this later case amounted to over $50,000. In July 1971, a complaint and indictment were filed against three local bakers charging a two year price fixing conspiracy in the eastern shore area of the States of Maryland and Virginia. A consent decree following nolo pleas, and total fines of $15,000 resolved the case in 1972.

25

21 United States v. Arnold Bakers, Inc.; Arnold Bread Sales Corporation Chester Plains Distributors, Inc., Robert A. Laurie, William F. Scott, Roland A. Sherwood, Edward J. Ksansnak, Gerald J. Perrcault, Edmond Toder, George A. Brown, and Samuel R. Sollars; Criminal No. 31665, complaint filed June 29, 1963, in the U.S. District Court for the Eastern District of Pennsylvania.

22 CCH Trade Cases 1969, P72, 874.

23 CCH Trade Cases 1969, P72, 827. 24 CCH Trade Cases 1971, P73, 500.

25 CCH Trade Cases 1972, P74,214.

A companion action was brought at the same time against two of the same defendants plus one additional company alleging a similar conspiracy in Baltimore, Maryland.26 The case resulted in $89,000 in fines.

Bread prices in the New York metropolitan area were maintained at artifically high levels for three years by a conspiracy, the Government charged in an indictment filed in 1972.27 Defendants were four national companies-American, General Host, ITT-Continental, and Ward which were the leading producers of bread in New York. Nolo pleas were entered and accepted. In December 1972, maximum fines of $50,000 were imposed on all defendants, except Ward, which received a $25,000 fine.

In a case resolved in November 1974, by a consent decree, the Government charged Rainbo Baking of Phoenix (a Campbell-Taggart subsidiary), and others with fixing prices and rigging bids since sometime before 1963. The fines totaled $126,500.28

In October 1972, the largest and second largest wholesalers of Italian, French, and Vienna bread in the greater Chicago area were charged, by complaint and indictment, with fixing prices and allocating accounts for their products.29 Gonnella and Torino Companies had a virtual monopoly in the relevant market. A significant amount of the stock of the two companies was commonly owned by members of the Gonnella and Marcucci families, and Torino regularly distributed Gonnella products. Beginning at least as early as the 1930's the Government charged the two bakers agreed not to compete for each other's accounts, fixed prices for French, Italian, and Vienna bread and used "threats, coercion and persuasion" to maintain the conspiracy. The civil action was concluded with a consent decree and the indictment produced nolo pleas, $100,000 in fines and one year's probation for members of the Marcucci family.

In each of four separate actions a complaint and indictment were filed in the Middle District Court of Louisiana in February of this year.30 Two involve Campbell-Taggart subsidiaries, and all four involve subsidiaries of IBC, another leading national baker. The charges. concern fixed prices and rigged bids in parts of Louisiana, Arkansas, Mississippi, and Texas. The alleged conspiracy started in the Baton Rouge area in the mid-1950's and was duplicated in three other nearby markets starting in 1971 and 1972. In all four markets, the defendants are the principal wholesalers of baked goods. This August the court returned a verdict of not guilty in the Baton Rouge case. Thus, one of the four criminal actions has been resolved and four out of the fifteen officers charged have been found not guilty.

Also pending is an El Paso, Texas, case 31 in which the three leading bakers, among them a Campbell-Taggart subsidiary, have been charged with a 20 year conspiracy to fix prices and rig bids to Government institutions. In a civil action, the Government is claiming damages in an amount still undetermined. On August 28, 1975, the three companies entered nolo pleas. No individuals were named in the indictment. The sentencing is yet to come.

26 CCH Trade Cases 1972, P74,213.

27 CCH Trade Regulation Reporter, Vol. 5, P45,027 (Case 2277). 28 CCH Trade Regulation Reporter, Vol. 5, P45,074 (Case 2369). 29 CCH Trade Cases 1974, P75,197.

30 CCH Trade Regulation Reporter, Vol. 5, P45,075 (Case 2433). 31 CCH Trade Regulation Reporter, Vol. 5, P45,075 (Case 2455).