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STATE WHOLESALE GROCERS v. GREAT ATLANTIC & P. TEA

United States District Court, Northern District of Illinois, E.D


July 25, 1957

STATE WHOLESALE GROCERS, A CORPORATION; ZEIGMUND WHOLESALE GROCERY CO., INC., A CORPORATION; RALPH C. BERG, D/B/A BERG'S FOOD STORE; LEO BERNARD, D/B/A LEO'S FOOD MART; BERNARD BRUSKI, D/B/A UNITED MEAT MARKET; EPH GOLDSTEIN, D/B/A GOLDSTEIN'S PROGRESSIVE FOODS; EARL LARSON AND WARREN LARSON, CO-PARTNERS, D/B/A FRANKLIN GROCERY AND MARKET; JACK LEVIN AND HARVEY BEREBITSKY, CO-PARTNERS, D/B/A HARVEY'S SUPERMART; O.V. MAKELA, D/B/A MAKELA'S FOOD STORE; JOHN L. MALEVITI'S, D/B/A FRUITLAND FOODS; JACK E. MARKUS, D/B/A ALLIANCE MEAT SHOP; CARMEN MASTRI, D/B/A CICERO LAKE FOOD MART; STEVEN J. MINARIK, D/B/A NORWARD PARK I.G.A.; HENRY E. MUIR AND HUGH A. MUIR, CO-PARTNERS, D/B/A FIFTH AVENUE FOOD MART; STANLEY PIEKARZ, D/B/A STEVEN'S CERTIFIED SUPER MARTS; ANTHONY RACZ, D/B/A SAVE-WAY FOOD MART; EDW. J. SCHUETZ, D/B/A SCHUETZ'S I.G.A. SUPER-MARTS; JOSEPH D. STONE, D/B/A CLOVER FOOD MART; ROBERT M. WAGNER AND ELIZABETH WAGNER, CO-PARTNERS, D/B/A WAGNER GROCERY AND MARKET; ATLAS MARKET COMPANY, A CORPORATION; DOMINICKS FINER FOODS, INC., A CORPORATION; CARL A. SCHLETZ, INC., A CORPORATION, PLAINTIFFS,
v.
THE GREAT ATLANTIC AND PACIFIC TEA COMPANY, A CORPORATION; WOMAN'S DAY, INC., A CORPORATION; GENERAL FOODS CORPORATION, A CORPORATION; HUNT FOODS, INC., A CORPORATION; MORTON SALT COMPANY, A CORPORATION, DEFENDANTS.

The opinion of the court was delivered by: Campbell, District Judge.

  This is a private action for treble damages and injunctive relief brought under Sections 4 and 16 of the Clayton Act.*fn1 Plaintiffs are twenty retail and two wholesale grocers located in the Chicago Metropolitan Area who bring this action on behalf of themselves and all retail and wholesale grocers similarly situated as an alleged class suit under Rule 23(a)(3) of the Federal Rules of Civil Procedure, 28 U.S.C.A. Defendants are The Great Atlantic and Pacific Tea Company (New Jersey), Woman's Day, Inc., General Foods Corporation, Hunt Foods, Inc., and the Morton Salt Company.

The Great Atlantic and Pacific Tea Company (New Jersey), hereinafter referred to as A&P (New Jersey), is a wholly owned subsidiary of The Great Atlantic and Pacific Tea Company of America, hereinafter referred to as A&P (Maryland). A&P (New Jersey) operates the A&P retail stores in the Chicago Metropolitan Area and is one of the three A&P companies which operate retail grocery stores throughout the United States. Where distinction between these two companies is not material, they will be referred to herein, individually or collectively, as "A&P."

Woman's Day, Inc., publishes Woman's Day, a women's magazine which is issued monthly and sold to A&P operating companies, including A&P (New Jersey), for resale only through A&P stores. Woman's Day, Inc. is a wholly owned subsidiary of A&P (Maryland).

General Foods, Hunt Foods and Morton Salt are food product manufacturers whose brand name products are sold throughout the United States by practically all retail grocers, including the plaintiff retailers and A&P (New Jersey). These three food manufacturers will hereinafter be referred to collectively as the defendant suppliers.

By the Court's memorandum and order of June 21, 1956 the issue of liability, including the issue of the fact of damages, was severed for trial from the issue of the amount of damages, the issue of the amount of damages having been reserved for reference to a Master when and if the issue of liability was resolved in favor of the plaintiffs. Subsequently, through the efforts of able and experienced counsel representing all the parties to this action, the issue of liability was tried on facts agreed upon and exhibits admitted into evidence pursuant to stipulations entered into by and between the respective parties in many pre-trial conferences. The interpretation and legal effect to be accorded these facts were argued by the parties in written briefs, and the issue of liability was taken under advisement by the Court.

Plaintiffs anchor their claim upon Sections 2(d) and 2(e) of the Clayton Act as amended by the Robinson-Patman Act.*fn2,*fn3. Additionally, however, plaintiffs, in an attempt to hold A&P (New Jersey) liable under Section 2(f) of the Act, 15 U.S.C.A. § 13(f), assert that the practices of the defendant suppliers, which the plaintiffs claim violate Sections 2(d) and 2(e), violate Section 2(a) as well.*fn4 Specifically and in capsule form, plaintiffs complain that the defendant suppliers advertise their various products in Woman's Day without making these "services" or "facilities" available to the plaintiffs on proportionally equal terms. This activity, plaintiffs argue, violates Sections 2(d) and 2(e) of the Act and, as a consequence, Section 2(a) as well.

Sections 2(d) and 2(e) of the Clayton Act as amended by the Robinson-Patman Act provide as follows:

    "(d) It shall be unlawful for any person engaged in
  commerce to pay or contract for the payment of
  anything of value to or for the benefit of a customer
  of such person in the course of such commerce as
  compensation or in consideration for any services or
  facilities furnished by or through such customer in
  connection with the processing, handling, sale or
  offering for sale of any products or commodities
  manufactured, sold, or offered for sale by such
  person, unless such payment or consideration is
  available on proportionally equal terms to all other
  customers competing in the distribution of such
  products or commodities."

    "(e) It shall be unlawful for any person to
  discriminate in favor of one purchaser against
  another purchaser or purchasers of a commodity bought
  for resale, with or without processing, by
  contracting to furnish or furnishing, or by
  contributing to the furnishing of, any services or
  facilities connected with the processing, handling,
  sale, or offering for sale of such commodity so
  purchased upon terms not accorded to all purchasers
  on proportionally equal terms."

It seems clear, upon a study of these sections, that Sections 2(d) and 2(e) are companion sections and that distinctions between them should not be drawn merely because of the differences in terminology employed in each section. These sections are companion sections to the extent that they have the same purpose and seek to eliminate the same evil; but although they have the same purpose, each section achieves the same result by proscribing different methods of attaining the common result condemned. Thus, while Section 2(d) prohibits payment by the seller for services or facilities undertaken by the buyer, Section 2(e) proscribes services or facilities furnished by the seller to the buyer. I shall first consider whether the evidence establishes that the defendants have violated Section 2(e) of the Act.

The Section 2(e) Issue

Here plaintiffs argue, in effect, that food suppliers, of whom the defendant suppliers are but three, furnish, or contribute to the furnishing of, Woman's Day magazine to A&P (New Jersey) since their payments for advertisements in Woman's Day recoup for A&P a substantial part of the annual cost necessary to produce Woman's Day. It has been stipulated that the annual cost of producing Woman's Day exceeds $9,000,000. Of that sum, less than one-quarter is recovered through the sale of copies, the remaining three-quarters being recovered from the sale of advertising space. The advertisers in Woman's Day are categorized as either "suppliers" or "non-suppliers." Supplier advertisers are manufacturers, such as the defendant suppliers, whose products are sold in A&P stores; conversely, non-supplier advertisers are manufacturers whose products are not sold in A&P stores. It has been stipulated that in 1954, 73.3 per cent of the advertising revenue, or $6,905,021, was received from supplier advertisers as against 26.7 per cent, or $2,508,822 received from non-supplier advertisers. In 1955, 65.5 per cent, or $6,073,693 was received from suppliers while 34.5 per cent, or $3,205,488 was received from non-suppliers. These figures, plaintiffs argue, conclusively show that Woman's Day magazine is "made possible" by the paid advertisements of food suppliers, such as the instant defendant suppliers. Plaintiffs reason that without the payments for the advertising of the food suppliers, Woman's Day magazine could not exist, unless this multimillion dollar cost expenditure was assumed by A&P itself. Plaintiffs conclude, therefore, that the defendant suppliers furnish, or contribute to the furnishing of, a service of facility, Woman's Day magazine, "to or for" the benefit of A&P (New Jersey).

It is, of course, true that, in a loose sense, a patron of a store, an advertiser in a magazine or newspaper, "makes" that particular business "possible." However, it seems that this is a clear case of the proverbial tail wagging the proverbial dog. Business patrons, whether the purchaser or the advertiser, are attracted by the quality of the business entity with which they place their patronage. For example, a leading department store, such as one of the several that we have in the Chicagoland area, is not made possible by the customers that patronize that store — it is made possible by such things as the quality and variety of merchandise offered for sale, pleasant shopping facilities and salespeople, liberal charge and exchange policies, eagerness to stand behind the products offered for sale at its store, and all such factors which contribute to the successful operation of any business. The store's success is made possible by the policies adopted and executed by its management. Thus, it is the store itself, through the expertise of its management, that makes the business of its customers possible, and it is not the customers that make the store possible.

And so it is with any leading newspaper or magazine, such as Woman's Day. Advertisements placed in these media are made possible or attracted by the quality of the medium itself. Thus, prescinding from the fact that A&P (Maryland) must have made a substantial investment in Woman's Day at the very beginning, if not later, and prescinding also from the fact that the direct copy sales of Woman's Day and the advertising of the non-suppliers, together, comprise a substantial percentage of the cost of producing Woman's Day (not to mention the supplier advertisers whose products, perhaps, are not handled by the plaintiffs), it seems quite obvious that Woman's Day magazine, and the advertisements therein, are "made possible" by the admitted high quality of the magazine itself, which high quality, in turn, is "made possible" by the expertise of the management of Woman's Day, Inc. There is a considerable amount of ingenuity, skill, creativeness and perseverance which goes into the publishing of any high quality magazine much the same as these qualities go into the successful operation of any business in a highly competitive business world. These qualities, apparently, are possessed by the management of Woman's Day, which, admittedly, is a high quality magazine, having been, for 14 years, among the top ten national magazines in circulation and among the top twenty-five in advertising revenue. Thus, it is the high quality of Woman's Day, reflected by its editorial content, that sells the magazine to the public — these sales, in turn, attract the advertising revenue of such manufacturers as the defendant suppliers. It seems manifestly clear that a magazine the public will not buy cannot earn advertising revenue and it seems equally clear that the public does not buy a magazine for its advertisements but for its editorial content. As counsel for A&P and Woman's Day argue, the advertiser's payment and all other revenue of the publishing entity lose all identity in the process of publishing the magazine.

Thus, the conclusion is inescapable that the defendant suppliers do not furnish or contribute to the furnishing of Woman's Day magazine to A&P within the meaning of Section 2(e) of the Act. What we have here are advertisements placed by food suppliers in a top ranking magazine which is published by a wholly owned subsidiary of A&P (Maryland). Both the magazine and the advertisements therein contained are furnished by A&P (Maryland) through Woman's Day, Inc. The evidence fails to reveal that the defendant suppliers have furnished, or have contributed to the furnishing of, any services or facilities to or for the benefit of A&P. If plaintiffs can be heard to complain of any activity on the part of the defendant suppliers, it is the payments by these suppliers for their advertisements which they place in Woman's Day magazine. Therefore, if plaintiffs have a cause of action at all it is for possible violations of Section 2(d) which prohibits payment by the supplier for services furnished by the purchaser.

For the reasons stated, I hold that the plaintiffs have failed to prove that the defendant suppliers have furnished, or have contributed to the furnishing of, any service or facility to A&P within the meaning of Section 2(e) of the Clayton Act, as amended by the Robinson-Patman Act.

The Section 2(d) Issue

In discussing Section 2(d), it becomes necessary to examine the methods employed by each of the defendant suppliers in determining the medium in which each should advertise, and particularly whether each should advertise in Woman's Day magazine.

General Foods

General Foods is a large food merchandising company which handles more than 50 different grocery store products. In its 1956 fiscal year it sold $759,200,000 worth of grocery products and spent more than $75,180,000 in advertising them.

General Foods is comprised of eleven operating divisions. The marketing function of each division selling grocery store products is in charge of a marketing manager who is responsible for the advertising and selling of all the products of that division. Reporting to the marketing manager are the product group managers or the particular product managers. Product group managers and product managers are responsible for the development and execution of marketing plans, including advertising plans, for the specific products assigned to them. Both the initial and final decision on the contents of a marketing plan are made by the product group manager or product manager, subject to the approval of his superiors. The responsibility of selecting and recommending the specific advertising media within the framework of the marketing plan rests with the particular advertising agency retained by the company.

In determining what medium should be used to advertise a particular product (whether magazines, newspapers, outdoor posters, car cards, radio or television), General Foods' advertising agencies take many factors into consideration. These factors include the stated objectives of the advertising program; the nature and strength of the competition; who are the prospective purchasers of the products — i.e., men, women, children, age, income bracket, educational level; the locality where these prospects live — i.e., in small towns and rural communities, in cities, in metropolitan centers, in which geographical areas of the country; and the distribution pattern of the particular product.

If the agency retained by General Foods determines that an advertising effort or part of any advertising effort should be through magazines, the selection of the magazines, or of a particular magazine, requires the weighing of many considerations, such as circulation, geographical distribution of readers, cost per thousand circulation, number of readers for each copy, characteristics of the magazine and its readers, education and income level of the magazine's audience, the prestige of the magazine, and the nature and quality of its editorial material.

Applying these general considerations to the case at bar, it has been stipulated that the criteria considered by General Foods in determining whether or not Woman's Day was to be included in a media schedule for a particular product were the same criteria that were considered by General Foods in the selection of any other magazine or medium.

Hunt Foods

Hunt Foods is a large food merchandising company which handles more than 15 different grocery store products. In its 1955 fiscal year Hunt sold $85,558,310 worth of grocery products and spent $5,741,000 advertising them. Hunt's advertising program is prepared by its advertising department in consultation with the particular advertising agency retained by it.

Hunt considers many criteria and factors in selecting publications in which to advertise its products. Among these factors are the publication's circulation, and all aspects thereof including not only the total figure but also the pattern of this circulation by geographical areas. Hunt also considers the cost of using the publication, and specifically, the base page rate and quantity and frequency discounts. Another criterion that Hunt considers is the audience statistics such as the relation of men to women readers and how large the total audience becomes as a result of secondary and pass-along readership. Hunt also considers the editorial policies of the publication and its mechanical quality, such as the process by which it is printed and the quality and size of its paper. Hunt gives primary consideration to an adequate "national" advertising program using media whose circulation figures bear a proper relationship to the national population pattern. After providing for national coverage, Hunt then considers those media which have a more regional than national influence.

The extent of Hunt's advertising in any particular medium is determined by the amount of money which can be allocated to advertising in a given period and by selecting the medium that it feels best reaches the potential customers of its products and also best serves its designated purposes.

In deciding to advertise in Woman's Day magazine, Hunt has used and considered the same factors and criteria which it considered in determining to advertise in any other publication.

Morton Salt Company

Morton Salt is a substantial producer of various salt products. In 1955 Morton sold 7,327,672 units of salt products and spent $2,342,619 in advertising them. Morton's advertising program is the result of consultations and deliberations between Morton's advertising agency and Morton's advertising department.

In determining whether to advertise in a particular publication, Morton considers that publication's total circulation; its cost per thousand circulation; its gross cost; the characteristics of the publication's readers according to age, education, etc.; the publication's geographical circulation and circulation in terms of population density both as compared with Morton's sales and total grocery store sales; and, finally, Morton also considers the quality of the printing reproduction. In deciding to advertise in Woman's Day, Morton has been guided by the same factors that it considered in determining to advertise in any magazine.

In summation, viewing the processes which the defendant suppliers utilized in choosing to advertise in Woman's Day magazine, the evidence is clear that these defendants chose to advertise in Woman's Day after having weighed the same criteria that they considered before advertising in any medium and, more specifically, in any magazine. Woman's Day magazine met the test to which each of the defendant suppliers placed any magazine, passed it, and, as a consequence, each of the defendant suppliers placed their advertisements therein. Thus, there is no evidence of any ulterior motive on the part of the defendant suppliers in advertising in Woman's Day nor does it appear that the defendant suppliers had intended to favor A&P (New Jersey) over any of its other customers. It is also interesting to note that it has been stipulated that the extent to which A&P promotes or merchandises the products of its suppliers is and has been in no way affected by the fact that such suppliers do or do not advertise in Woman's Day or by the extent of such advertising if there is any. Additionally, the evidence also reveals, through the testimony of Harry B. George, National Director of Purchases of A&P, that whether manufacturers or processors of grocery store products do or do not advertise in Woman's Day is never considered in any manner by A&P in deciding whether, or to what extent, to purchase their products for resale in A&P retail stores. George also testified that the advertising in Woman's Day by such manufacturers or processors has no effect on the prices paid by A&P for products purchased for resale in A&P retail stores. Plaintiffs, however, attach no significance to this evidence, which they do not dispute, but argue that, nonetheless, the Act has been violated, if equal payments have not been afforded to them.

Nor do the plaintiffs attach any significance to the evidence which clearly reveals that the defendant suppliers receive full value for their payments for their advertisements in Woman's Day. Woman's Day is, admittedly, a high quality magazine enjoying a substantial circulation. This fact, when considered with the fact that the advertising rates charged by Woman's Day, Inc. to all advertisers in Woman's Day, including the defendant suppliers, for advertisements in said magazine are comparable to and competitive with the rates charged and prices paid per thousand circulation in magazines of comparable national circulation, makes the conclusion inescapable that the defendant suppliers receive full value for their advertisements in Woman's Day. Plaintiffs do not contend otherwise but argue that whether the defendant suppliers receive full value is immaterial in view of the fact that like payments by the defendant suppliers were not made available to the plaintiffs on proportionally equal terms.

In support of their position, plaintiffs cite a passage from Congressman Utterbach's speech which was given just before the adoption of the Act. Congressman Utterbach stated:

    "The existing evil * * * is, of course, the grant
  for discriminations under the guise of payments
  for * * * services which, whether or not * * *
  actually rendered as agreed, result in an advantage
  to the customer so favored as compared with others
  who have to bear the cost of such services
  themselves." (Emphasis plaintiffs'.) 80 Cong. Rec.
  9418.

Plaintiffs emphasize the words, "whether or not * * * actually rendered as agreed," as indicating that it does not matter that the supplier receives value for his payments for such "services." This reasoning, however, is clearly untenable for it is manifest that Congressman Utterbach was speaking there of services which, of their very nature, were designed primarily to benefit the customer. Thus, if the service paid for is designed primarily to benefit the customer then it matters little if the services are rendered or not — on the one hand, the customer is benefited by the services which the supplier pays for, and on the other hand, the customer, instead of having the services performed, is benefited by keeping the money given him by the supplier. Either way, the customer is benefited and the Act is violated if the service to be rendered is designed primarily to benefit the customer.

Thus, in the Senate and House Committee Reports, it is stated:

    "Still another favored medium for the granting of
  oppressive discriminations is found in the practice
  of large buyer customers to demand, and of their
  sellers to grant, special allowances in purported
  payment of advertising and other sales-promotional
  services, which the customers agree to render with
  reference to the seller's products, or sometimes with
  reference to his business generally. Such an
  allowance becomes unjust when the service is not
  rendered as agreed and paid for, or when, if
  rendered, the payment is grossly in excess of its
  value, or when, in any case the customer is deriving
  from it equal benefit to his own business and is thus
  enabled to shift to his vendor substantial portions
  of his own advertising cost while his smaller
  competitor, unable to command such allowances, cannot
  do so." (Emphasis

  added.) Senate Report No. 1502, p. 7; House
  Report No. 2287, p. 15; 74th Cong. 2d Sess. 1936.

It is apparent, therefore, from a study of this section, as well as from a study of the entire legislative history of the Act, that where there is a service paid for by the supplier, and the service is actually rendered and the amount so paid is not in excess of the value of the service, it is necessary to determine: 1) whether the service would benefit only the supplier; 2) whether the service would benefit only the customer; or 3) whether the service would benefit both the supplier and his customer. If a service can be said to benefit only the supplier or if the service benefits only the customer, there is no difficulty, as in the one case the Act is violated while in the other it is not. However, where it is conceivable that a service might benefit both the supplier and the customer, then, and only then, it becomes necessary to determine whom the services were primarily designed to benefit. If the services were primarily designed to benefit the supplier, the Act has not been violated; if the services were primarily designed to benefit the customer, then the Act has been violated unless proportionally equal treatment has been given that customer's competitor. If it is made to appear that equal benefits accrued to both the supplier and his customer from the service, then also the Act has been violated; and in determining whether the customer receives equal benefit, it must be made to appear that the customer has been able to shift to his supplier "substantial portions of his own advertising costs." It becomes necessary, therefore, to examine the nature and extent of the benefits flowing from the defendant suppliers' paid advertisements in Woman's Day magazine.

As has been indicated, the advertisements in Woman's Day of each of the defendant suppliers were the result of a careful evaluation of Woman's Day as an advertising medium, each defendant supplier, through its advertising department and advertising agency, employing the same criteria in choosing to advertise in Woman's Day that it considered in choosing to advertise in any medium. Woman's Day is a high quality magazine of national prominence and it is considered an excellent advertising medium as attested by the list of nationally prominent advertisers (both food suppliers and non-food suppliers) that place their advertisements regularly in Woman's Day. And it is manifest that the defendant suppliers receive full value for their payments for their advertisements in Woman's Day. These facts, when considered with the absence of any evidence tending to establish any purpose or intent on the part of the defendant suppliers, individually or collectively, to favor A&P (New Jersey) over the defendant suppliers' other customers, clearly establish that each of the defendant suppliers' advertisements in Woman's Day was a component part of each supplier's advertising program which was designed only to promote public acceptance of the product advertised and, as such, was designed primarily to benefit each of the defendant suppliers. Indeed, there is no evidence of any ulterior motive on the part of any defendant supplier in advertising in Woman's Day.

Plaintiffs seem to suggest that the advertisements of each of the defendant suppliers in Woman's Day were A&P advertisements. To answer this, it is necessary to distinguish between grocery store advertising and national brand advertising of groceries. Grocery store advertising is designed and intended to bring people into a particular store and features the price of the product and the location of the store. National brand advertising, conversely, mentions no price and does not mention the name or location of any store or stores — it merely attempts to acquaint the reader with the desirability of trying a particular nationally known, brand name product.

In the instant case, the evidence reveals that the advertisements of each of the defendant suppliers were advertisements of the various products handled by each supplier; the advertisements failed to make any reference to the price of the particular product advertised, nor did they include any mention of the name or location of any store where these products might be purchased. Indeed, the copy of each of the defendant suppliers' advertisements in Woman's Day was identical with the copy run by each defendant supplier in other magazines and newspapers that were issued at or about the same time as was the particular issue of Woman's Day. Thus, the copy of each of the defendant suppliers' advertisements in Woman's Day was not in any way tailored to that magazine. The conclusion is inescapable that the advertisements of each of the defendant suppliers in Woman's Day were national brand advertisements of grocery products as distinguished from grocery store advertisements. This is but one of the facts which conclusively establish that the advertisements of each of the defendant suppliers were not A&P advertisements but were advertisements primarily designed to benefit each defendant supplier by promoting the sales of defendant suppliers' products to as many potential purchasers as possible, with the benefits accruing to A&P being only incidental.

That the advertisements of the defendant suppliers in Woman's Day were not A&P advertisements but national brand name grocery product advertisements with the benefits accruing to A&P being incidental to the benefits accruing to the defendant suppliers, is also established by the evidence that conclusively shows that the defendant suppliers' product advertising in Woman's Day aids in the sale of the advertised products by all grocers who carry the product advertised. This finding is based on several facts, the most important of which is that purchasers of food products do substantial shopping in more than one store. Indeed, the plaintiffs themselves, in attempting to show competition between A&P stores and independent retailers, argue, in their briefs, that the A&P and the independent are competing for the trade of the same customer "who interchanges his patronage."

The document entitled Bench Marks for the Next Five Years in Grocery Selling (Morton's Ex. 11), which was an address given to the National-American Wholesale Grocers Association, on September 13, 1955 by Curtis C. Rogers, Executive Vice President of the Market Research Corporation of America, contains some rather illuminating statistics concerning store loyalty of shoppers. On page 5 of this document, Rogers states, with respect to Chart VI appearing on that page:

    "But families don't shop in just one grocery store.
  The average family shops in 3.7 stores per month. The
  families shopping in independent stores average 2.6
  stores per month, while the exclusive chain store
  families shop in nearly 2 stores per month. But
  remember that 2/3 of all of the families shop in both
  chains and independents, and this group are really
  shoppers — they average 4 1/2 stores per month."

And on page 11 of Morton's Exhibit 11, Rogers states with respect to Chart XII appearing on that page:

    "We find that out of each 100 families who bought
  coffee in Store A, 44 made their next purchase of
  coffee at some other store — on canned vegetables, 56
  bought their second purchase at some other store —
  and on frozen vegetables, 52 bought next at a
  different store. The housewife shops where she can
  get the brands and the products that she wants at
  prices that represent the best value to her."
  (Emphasis his.)

The findings contained in Chart XII of Morton's Exhibit 11 were the result of a two-week shopping history of typical grocery items, while the findings reflected by Chart VI appear to be the result of a 15-year study of that particular topic. These findings are persuasive in corroborating what I believe to be facts that cannot be seriously disputed. Competition between grocery stores is very keen and in these days of the high cost of living, the housewife is well aware of the
necessity of seeking out a bargain. As a result, the housewife shops "where she can get the brands and the products that she wants at prices that represent the best value to her." She becomes acquainted with the necessary facts concerning a bargain in a number of ways, one of which being the grocery store advertisements appearing in newspapers and in handbills distributed to the homes in the vicinity of a particular store. On the other hand, the national brand grocery product advertising by the defendant suppliers appearing in Woman's Day might acquaint the reader with the desirability of trying a particular brand name food or keep the name of that product before the public, much the same as it does when it appears in other magazines such as Life, McCall's, Look, etc., but that advertising is not a suggestion, much less a command, to purchase the article at A&P. The food shopper buys where she can purchase the brands and products at the least cost to her. If an advertisement in Woman's Day attracts her attention favorably, she will purchase that product at one of the stores which she patronizes, if the price is right. Thus, viewing the lack of store loyalty among grocery store shoppers, and considering the fact that the grocery shopper interchanges her patronage and buys where she can get the quality product for the least money, and considering also the fact that the defendant suppliers' advertisements in Woman's Day are national brand name grocery product advertisements, which suggest neither the price nor place where the products might be purchased, I find that the advertisements by the defendant suppliers in Woman's Day magazine are designed to aid in the sale of the advertised products by all grocers who carry that product and not merely A&P. Accordingly, I find that, assuming that said advertisements in Woman's Day do the job that they were intended to do, the advertisements in Woman's Day have, in fact, aided in the sales of the advertised products in all grocery stores and not merely A&P stores.

Corroborative of this finding is a letter (A&P Ex. 61.) received by Woman's Day, Inc. from Heublein & Bro., makers of A. 1 Sauce. After informing Woman's Day that Heublein's experience was that Woman's Day produced an unusually high number of requests for an advertised A. 1 Sauce booklet, the letter dated December 3, 1943, stated as follows:

    "Therefore, I am very happy to tell you of the
  swell job Woman's Day is doing for A. 1 Sauce. Even
  more significant is the fact that we can definitely
  trace a substantial increase in the sales of A. 1
  Sauce since we started using Woman's Day several
  years ago; not only through the A&P Stores, where the
  magazine is distributed but also through the other
  stores located in the neighborhood of the A&P stores.

    "This indicates to us an increased sale through all
  outlets catering to and competing for the business in
  the shopping neighborhoods adjacent to an A&P Store
  where Woman's Day is distributed."

Plaintiffs seek to discredit the weight of this letter by arguing that Woman's Day apparently could find only one such document from thousands of documents that were available to it. Assuming that this is true, nevertheless no document was introduced which stated a position contrary to the contents of Heublein's letter. Furthermore, the Heublein letter merely corroborates the conclusion drawn from the other evidence adduced; that is, the nature of the particular type of advertising in Woman's Day and the lack of store loyalty among grocery shoppers conclusively show that the defendant suppliers' advertisements in Woman's Day aided in the sales of the products advertised not only in A&P stores but also in all grocery stores carrying that particular product.

Underlying the conclusion that advertisements in Woman's Day aid in the general sale of the particular product advertised, is the fact that Woman's Day is not an "in-store" promotional device. In other words, although the shopper purchases the magazine in an A&P store, she does not read the magazine in the store. Thus, the shopper picks up a copy of the magazine at the check-out counter of an A&P store and does not get an opportunity to read the magazine until she leaves the store. That being the case, she is not exposed to defendant suppliers' advertisements in Woman's Day until after she leaves the A&P store. Assuming that an advertisement in Woman's Day arouses her desire to purchase a particular product, the shopper is free to purchase that product in the next store she visits if the price is acceptable. And it should be observed that many copies of Woman's Day are passed along to other readers who perhaps do not shop at an A&P store. Clearly, therefore, Woman's Day is not an "in-store" promotional device and, as such, the advertisements therein may benefit all grocery stores and not merely A&P stores.

Concerning the issue whether A&P shifts substantial portions of its own advertising costs to the defendant suppliers, here again, plaintiffs' position is unsupported by the evidence. As has been indicated, the advertisements in issue were designed primarily to benefit each of the defendant suppliers for which each received full benefit for their payments. The benefit accruing to A&P from these advertisements was merely incidental to that accruing to each of the defendant suppliers. These advertisements were not A&P advertisements but national brand grocery product advertisements. The evidence reveals that A&P spends millions of dollars in advertising each year. It is also interesting to note that the various A&P manufacturing subsidiaries, which compete with the defendant suppliers, advertise their products in Woman's Day for which full payment to Woman's Day, Inc. is made. Plaintiffs attempt to belittle these facts by arguing that A&P derives cost-free advertising from the promotion and sale of Woman's Day. Underlying this contention, however, is plaintiffs' argument that the defendant suppliers make Woman's Day possible by their payments for advertisements therein; but this contention, as has been indicated hereinbefore in this memorandum, is totally without merit. Nor is it true that A&P receives cost-free advertising from Woman's Day because the record shows that A&P has paid for certain of Woman's Day's advertisements on radio, television and in the newspapers, and the record also reflects that the costs of distribution of the magazine from the warehouse to the store are assumed by A&P, not to mention the fact that certain A&P employees devote an appreciable amount of time in the promotion, distribution and sale of Woman's Day. It is quite apparent, therefore, from the evidence adduced that A&P does not shift substantial portions of its own advertising costs to the defendant suppliers.

For the reasons stated, I hold that the advertisements of each of the defendant suppliers in Woman's Day magazine were not A&P advertisements but advertisements primarily designed to benefit each of the defendant suppliers who received full value therefrom with the benefits accruing to A&P being incidental to those accruing to each of the defendant suppliers. I also hold that the evidence fails to reveal that A&P has shifted to the defendant suppliers substantial portions of A&P's own advertising costs. Accordingly, I hold that the plaintiffs have failed to prove that the defendant suppliers have violated Section 2(d) of the Clayton Act as amended by the Robinson-Patman Act.

There are, however, other reasons which compel such a finding. The evidence reveals that the defendant suppliers advertised in other store distributed magazines, such as Family Circle, Better Living, Everywoman's and American Family. Better Living was sold by seven of the plaintiffs until it suspended publication in May 1956. At present, none of the plaintiffs offers for sale a store magazine as apparently no such magazine is available for their distribution. However, I think a reasonable inference could be drawn from the evidence adduced that the defendant suppliers would advertise in a magazine distributed by any of the plaintiffs if it met the fixed standards that must be satisfied before each of the defendant suppliers decided to advertise in any magazine. The question arises, therefore, whether the Act is violated if the one purchaser is unable to furnish the service which that purchaser's competitor furnishes and for which the common supplier makes payment. Stated in another way, assuming arguendo that the payments by the defendant suppliers in this case for advertisements in Woman's Day violated Section 2(d) of the Act, how could the defendant suppliers have nullified that violation by making proportionally equal payments to the plaintiffs, if the plaintiffs could not furnish the service for which payment would be made? Congressman Utterbach answers this dilemma by stating:

    "But it is further claimed that the provisions of
  the bill with regard to advertising allowances work a
  hardship on the small manufacturer, in that they
  require such allowances to be granted to all
  competing customers on proportionally equal terms.
  But proportional to what? Proportional naturally to
  those customers' purchases and to their ability and
  equipment to render or furnish the service or
  facilities to be paid for." (Emphasis added.) 80
  Cong.Rec. 9416.

In the instant case, the plaintiffs do not publish or sell a store distributed magazine and, thus, they are unable and unequipped to render or furnish the services for which payment would be made and for which the defendant suppliers in this case pay Woman's Day. Being so unable to furnish these services, plaintiffs have no standing to complain about the defendant suppliers' advertising in Woman's Day even if it were assumed that these payments violated the Act. This seems manifestly clear from the overall intent of the Act and particularly from the quoted excerpt from Congressman Utterbach's speech. Plaintiffs' suggestion that this difficulty could be cured if A&P made Woman's Day available for sale in all grocery stores, including plaintiffs', is untenable for the simple reason that the Act imposes no such duty on one customer of the common supplier to furnish for his competitor services which the competitor is unable to render and for which the common supplier would make payment to him.

Plaintiffs fail to cite any authority which militates against the conclusions reached in this memorandum. The cases they cite, unlike the case at bar, involved services which were inherently discriminatory in that they could in no way benefit any customer other than the customer to whom the service was given. Thus in each case the service involved was primarily designed to benefit the one customer and not the supplier, or at least the benefits were equal between the two.

In Corn Products Refining Co. v. Federal Trade Commission, 324 U.S. 726, 65 S.Ct. 961, 969, 89 L.Ed. 1320, Corn Products spent $750,000 in advertising Curtiss candy bars as being "rich in dextrose." Corn Products had sold dextrose to Curtiss which processed the dextrose into candy bars which Curtiss then sold to the consuming public. The Supreme Court held that Corn Products' failure to make those advertising services available to its customers on proportionally equal terms violated Section 2(e) of the Act. In that case it is quite clear that Corn Products was primarily advertising Curtiss candy bars and that it was assuming advertising costs which properly should have been borne by Curtiss. The results of these advertisements could have in no way benefited any of Curtiss' competitors and thus it could not have been said that the results thereof benefited Corn Products primarily and Curtiss only incidentally.

In Elizabeth Arden Sales Corp. v. Gus Blass Co., 8 Cir., 150 F.2d 988, 161 A.L.R. 370, Elizabeth Arden paid one customer for the entire salary of a store clerk who was provided by that customer to demonstrate Elizabeth Arden products. However, Elizabeth Arden paid another customer, who was a competitor of its first customer only one-half of the salary of the demonstrator provided by it. The Court of Appeals for the Eighth Circuit held that this unequal treatment to competing customers of Elizabeth Arden bore no reasonable basis and was therefore discriminatory and violative of the Act. Thus, it is again manifest that the demonstrator's service could in no way benefit any competitor of the favored customer. The demonstrator's service was designed primarily to benefit the one customer with Elizabeth Arden assuming costs for services which ordinarily should be assumed by the customer who resells the product to the consumer.

And so it is with the services involved in the Federal Trade Commission cases cited by the plaintiffs. Each case involved services which were inherently discriminatory and which were primarily designed to benefit only the customer. No useful purpose would be gained by going into a more detailed discussion of those cases; suffice it to say that they are readily distinguishable on their facts from the instant case.

The Section 2(a) and Section 2(f) Issues

Plaintiffs admit that their claim against the defendant suppliers under Section 2(a) of the Act is bottomed on plaintiffs' claim that Sections 2(d) and 2(e) were violated. In other words, they argue that if Sections 2(d) and 2(e) are violated here, then Section 2(a) is violated as well. Plaintiffs urge this position in an attempt to hold A&P liable under Section 2(f) of the Act. Since I have held that the defendant suppliers have not violated either Section 2(d) or 2(e), it follows that I must also hold that plaintiffs have failed to prove that the defendant suppliers have violated Section 2(a) of the Act. Additionally, however, the record fails to reveal that the defendant suppliers have granted A&P either direct or indirect price discriminations; and, even if it could be assumed that plaintiffs sustained their proof under Section 2(a), the record is devoid of competent evidence tending to prove that A&P knowingly induced a discrimination in price within the purview of Section 2(f) of the Act.

Plaintiff Wholesalers' Claim

In this memorandum, I have considered plaintiff wholesalers and retailers as comprising one complaining group. Indeed, the wholesalers' claim is predicated on their assertion that their customers, who they claim are similarly situated with the instant retailers, have been injured the same as the instant retailers with the result being that the plaintiff wholesalers are thereby also injured because their customer will buy less from them as a result of defendant suppliers' challenged activities. Prescinding from the logic of such reasoning, it is obvious that the wholesalers' claim is no better than the retailers' claim and, accordingly, the issues must be resolved against them.

In their briefs, plaintiffs make the subtle suggestion that A&P (Maryland) had founded Woman's Day as a means of avoiding the consequences of the Robinson-Patman Act which, plaintiffs indicate, was primarily directed against A&P, among others. Suffice it to say, that this contention finds no support in the record. The record does indicate, however, that Woman's Day is a legitimate business enterprise founded for legitimate purposes. Woman's Day is accepted by the public as an excellent magazine and by established advertising agencies as an excellent advertising medium. The record is absolutely devoid of any evidence that Woman's Day was created for any purpose other than for legitimate business reasons. I find absolutely no conduct on the part of any defendant that could, in any conceivable way, be construed as violative of any of the anti-trust law.

In this case, all parties have cited excerpts from Congressman Patman's book, The Robinson-Patman Act, which was written after the Robinson-Patman Act was adopted by Congress. It should be observed that while resort to the legislative history of an act that appears to be ambiguously drawn is a practice that has long been accepted in American Jurisprudence, I cannot accept the practice of citing, as authority, books or other publications subsequently written by legislators concerning what was or was not intended to be covered by a particular act previously adopted by Congress while the author was a member thereof. In Congressman Patman's book, several questions were put to the author concerning whether, under certain facts, a particular practice would constitute a violation of the Act. The author then stated his opinion whether, on the facts so given, the Robinson-Patman Act would have been violated. The parties in this case have attempted to draw an analogy between the facts of this case and the facts of the particular example-case which best suits their purposes. They conclude this line of persuasion by urging a ruling consistent with the particular advisory opinion rendered by Congressman Patman. While resort by the courts to such a novel procedure of resolving an issue might be a convenient way of disposing of these Robinson-Patman Act cases, it is a practice which would amount to an abandonment by the courts of their judicial function and, as such, cannot be condoned. Although legislative histories may be considered by the courts, a book subsequently written by a legislator, even though he be a co-author of the Act, and with all respect to his good intentions in writing such a book, should be given no consideration by a court in determining whether there has or has not been a violation of a particular act. Such a book might be helpful to a businessman as a guide in conducting his business practices but courts of law should resort to more competent authority.

In reaching the conclusions announced in this memorandum, I am not unmindful of the fact that the defendants have advanced other grounds which might bar the plaintiffs from recovering in the instant case. Since, however, I find defendant suppliers' as well as A&P and Woman's Day's conduct herein so above reproach as far as the Clayton and Robinson-Patman Acts are concerned, I feel it unnecessary to prolong this memorandum by discussing issues that are presented by these defendants in arguendo form.

One final word deserves mentioning. I have refrained from discussing much of the evidence submitted by the various parties. Suffice it to say that I have carefully considered all of the evidence submitted and to the extent that this evidence is found as facts to support the conclusions expressed in this memorandum, it will be incorporated in the findings of fact entered herein. Concerning plaintiffs' objection to the admissibility of the Shopping Survey (A&P Ex. 25) proffered by A&P, plaintiffs' objection is overruled and the same may stand as evidence together with the other exhibits that were admitted pursuant to stipulation.

I cannot close this memorandum without commending all counsel of record herein for their outstanding efforts and genuine ability which enabled prompt disposition of the case by submitting it on stipulation.

The many pre-trial conferences in which counsel so effectively participated, the long and tedious hours spent in their various offices resolving differences on specific exhibits and preparing stipulations as well as the willingness of all properly to assist the Court and each other constitute an inspiring exemplification of the highest ideals of the legal profession. I am deeply grateful to all counsel.

Findings of Fact

1. This is an action brought on March 2, 1956, by certain named retail and wholesale grocers individually and purportedly as representatives of a class under Section 7 of the Act of Congress of July 2, 1890, c. 647, 26 Stat. 209, as amended, 15 U.S.C.A. § 15 note, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," commonly known as the Sherman Act, and under Section 15 of the Act of Congress of October 15, 1914, c. 323, 38 Stat. 736, as amended, 15 U.S.C.A. § 25, entitled "An Act To supplement existing laws against unlawful restraints and monopolies and for other purposes," commonly known as the Clayton Act, for a decree:

(a) Adjudging that the defendants have violated Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2, and Sections 2(a), (d), (e) and (f) of the Clayton Act, as amended;

(b) Adjudging that each plaintiff was injured in his business or property thereby;

(c) Preventing and enjoining continuing violations by defendants of said sections of said acts;

(d) Granting to plaintiffs three times the amount by which each of the named plaintiffs was damaged, together with costs and reasonable attorneys' fees; and

(e) Requiring all other members of the class allegedly represented by plaintiffs to file their claims with the Court and have their damages established and granted.

2. On October 23, 1956, plaintiffs abandoned their claim that defendants had violated the Sherman Act, thus leaving only the claim that each plaintiff was injured by alleged violations of Sections 2(a), (d) and (e) of the Clayton Act, as amended, by General Foods Corporation, Hunt Foods, Inc. and Morton Salt Company and of Section 2(f) by The Great Atlantic and Pacific Tea Company.

3. The plaintiffs named in the complaint are twenty-three retail and two wholesale grocers located in the Chicago Metropolitan Area. The plaintiff retailers are retail grocers as distinguished from chain store retail grocers. With but few exceptions each of the plaintiff retailers operates a single store and said stores are located throughout the Metropolitan Area of Chicago. In addition, there are numerous other retail grocers situated within the Chicago Metropolitan Area who handle and sell at retail groceries, meat and produce commodities directly to the consuming public within said area. There are approximately 13,000 such retail grocers in the Chicago Metropolitan Area, all of whom are independent grocers as distinguished from chain store grocers. On October 17, 1956, three of the retail grocers withdrew as plaintiffs (Louis Janowitz, d/b/a Janowitz Finest Foods, Joseph Karas, d/b/a Kostner-Lake Food Market and Henry C. Surowiec, d/b/a Surowiec's Grocery and Market). Both of the plaintiff wholesalers are located in the Metropolitan Area of Chicago. They handle and sell grocery products to independent retailers (not including the plaintiff retailers) as distinguished from chain store retailers, located in the Chicago Metropolitan Area. There are numerous other wholesale grocers who handle and sell grocery products to independent grocers situated within the said area.

4. The action was brought by plaintiffs on their own behalf and also allegedly on behalf of all other retail and wholesale grocers similarly situated within the City of Chicago, Illinois, and also within such part of the area adjacent thereto commonly known as the Metropolitan Area of Chicago as is within the territorial jurisdiction of this Court.

5. The following corporations are defendants to this cause:

(a) The Great Atlantic and Pacific Tea Company (New Jersey), herein referred to as "A&P (New Jersey)," a New Jersey corporation.

(b) Woman's Day, Inc., a New York corporation.

(c) General Foods Corporation (herein referred to as "General Foods"), a Delaware corporation.

(d) Hunt Foods, Inc. (herein referred to as "Hunt Foods"), a Delaware corporation.

(e) Morton Salt Company (herein referred as as "Morton"), an Illinois corporation.

6. A & P (New Jersey) is a wholly owned subsidiary of The Great Atlantic and Pacific Tea Company of America, a Maryland corporation (herein referred to as "A & P (Maryland)"). The retail stores of The Great Atlantic and Pacific Tea Company (herein referred to as "A & P stores") throughout the United States are operated by A & P (New Jersey), and two other wholly owned subsidiaries of A & P (Maryland), i.e., The Great Atlantic and Pacific Tea Company (Arizona) and The Great Atlantic and Pacific Tea Company (Nevada). The A & P stores in the Chicago Metropolitan Area are operated by A & P (New Jersey). Where distinction between these various companies is not material, they will be referred to herein, individually or collectively, simply as "A & P."

7. Woman's Day, Inc. is a wholly owned subsidiary of A & P (Maryland) and is engaged in the business of publishing the magazine Woman's Day.

8. General Foods, Hunt Foods and Morton are engaged in the manufacture and sale of food products. These three defendants are sometimes referred to collectively herein as the "defendant suppliers."

9. The named plaintiffs are 20 individuals or partnerships operating a total of 24 retail grocery stores of varying sizes located in the Chicago Metropolitan Area, and two wholesale grocers in the City of Chicago who sell to independent retailers.

10. None of plaintiff retailers purchase products from plaintiff wholesalers. Most of plaintiff retailers are members of cooperative buying organizations such as Independent Grocers Alliance, Certified Grocers of Illinois, Grocerland Cooperative, Inc., Progressive Food Stores, Inc., and Central Grocers Co-operative, Inc.

11. Defendant A & P (New Jersey) operates retail grocery stores, including those in the Chicago Metropolitan Area. A & P operates 4,000 retail grocery stores throughout the United States. There are, approximately, 216 A & P stores in the Metropolitan Area of Chicago and 125 in the City of Chicago.

12. Woman's Day, Inc. is engaged in the business of publishing the magazine Woman's Day, which is distributed in A & P stores.

13. A & P (Maryland) owns all of the stock of Woman's Day, Inc. and several corporations which manufacture food products. These products are sold only in A & P stores.

14. General Foods manufactures and distributes through eleven separate divisions a number of nationally known food products such as Jello-O Desserts, Birds Eye Frozen Foods, Post Cereals, etc. These are all advertised under their brand names.

15. Hunt Foods manufactures and distributes tomato catsup, chili sauce, tomato sauce and canned fruits and vegetables under its own name or that of "Snider's" or "Pride of the Farm".

16. Morton manufactures and distributes a variety of salt products, primarily the Blue Package, Miniatures and Salters.

17. Plaintiff retailers, plaintiff wholesalers and A & P sell one or more of the products of each defendant supplier.

18. Each retail plaintiff is a competitive seller of an A & P store in the sense that both stores are seeking to gain the trade of at least one customer. Each plaintiff wholesaler sells grocery products to retail stores, at least one of which is seeking to gain the trade of at least one customer whose trade an A & P store is seeking to gain.

19. At all times pertinent to this suit the sales by General Foods Corporation to A & P in the Chicago Metropolitan Area of some of its products which were advertised in Woman's Day at some time or times during the period from March 1, 1954 to March 31, 1956, were sales in interstate commerce.

20. All sales by Morton pertaining to the issues of this case which have been made to customers in the Metropolitan Area of Chicago, including any made to A & P and wholesaler plaintiffs herein, have been made in interstate commerce.

21. Hunt Foods manufactures products in states other than Illinois and ships the same across state lines to wholesale grocers in Illinois and other states outside of the state of manufacturing, including plaintiff wholesalers and other wholesalers in Chicago and the Metropolitan Area thereof. Products of Hunt Foods, Inc. are sold and distributed by it in interstate commerce directly to A & P.

22. Certain of the products sold by A & P in the Chicago Metropolitan Area including certain products of defendant suppliers were shipped into the Chicago Unit warehouse of A & P by the suppliers from points outside the State of Illinois and thence distributed to A & P stores in said area.

23. All sales to the consumer by retailer plaintiffs and by A & P stores referred to in the Appendix to the A & P Stipulation were consummated in the stores of the respective retailer plaintiffs and said A & P stores. All sales by the two wholesaler plaintiffs were made to customers located in the Chicago Metropolitan Area, including Michigan and Indiana.

24. Woman's Day is printed and bound by Woman's Day, Inc. outside the State of Illinois, and distribution is made by Woman's Day, Inc. to the various warehouses of A & P.

25. The magazine Woman's Day has been published monthly by Woman's Day, Inc. in substantially its present form since October, 1937, and has a monthly circulation of over 3,300,000 copies.

26. Woman's Day is of comparable content and quality with the leading women's magazines such as Good Housekeeping, Ladies' Home Journal, Woman's Home Companion and McCall's. It has for 14 years been among the 10 top national magazines in circulation and among the top 25 magazines in terms of advertising revenue, and has won national awards for its accomplishments in editorial, art and homemaking fields.

27. In reporting on the effectiveness of various magazines as advertising media, Woman's Day has frequently been compared by leading independent advertising agencies with the woman's service magazines like Ladies' Home Journal and Woman's Home Companion and other magazines such as Better Homes and Gardens, Saturday Evening Post and Cosmopolitan.

28. Woman's Day is distributed monthly and is sold solely through A & P retail stores, except in Colorado where the magazine is sold on newsstands. The magazine is shipped by Woman's Day, Inc. to A & P warehouses and from there is delivered by A & P trucks to individual retail stores.

29. Woman's Day is usually displayed in A & P stores at the check-out counters.

30. A & P pays Woman's Day, Inc. five cents per copy for the magazine, and it is sold in A & P stores for seven cents per copy.

31. The Board of Directors of Woman's Day, Inc. has included representatives of A & P. However, none of the operating staff or employees of Woman's Day, Inc. is an officer, director or employee of any A & P affiliated company.

32. The business of publishing Woman's Day is and has been conducted by Woman's Day, Inc. as a legitimate publishing business enterprise. Except for normal parent-subsidiary relationships and the distribution and promotion of Woman's Day by A & P, Woman's Day, Inc. has been kept separate from the grocery retailing business of A & P.

33. The annual cost of producing Woman's Day exceeds nine million dollars ($9,000,000.00). Less than one-fourth of this cost is recovered through the sale of copies. The remainder is received through the sale of advertising space. For example, in the fiscal year 1956, the gross revenue of Woman's Day, Inc. was $9,075,729.00 of which $2,170,850.00 or 24 per cent came from sales of the magazine and $6,904,879.00 or 76 per cent from advertising revenue. The advertising revenue is divided between "supplier" and "non-supplier" advertising "Supplier" advertisers are manufacturers or producers — such as the defendant suppliers — whose products are sold in A & P stores. "Non-supplier" advertisers are manufacturers or producers whose products are not sold in and are not of a type sold in A & P stores. In 1954, of the total gross advertising revenue, 73.3 per cent came from supplier advertisers, while 26.7 per cent came from non-supplier advertisers. In 1955, of the total gross advertising revenue, 65.5 per cent came from the supplier advertisers while 34.5 per cent came from the non-supplier advertisers.

34. No purchasing agent or any other person employed by A & P has ever discussed with A & P suppliers the latter's advertising in Woman's Day or has ever intimated that such advertising would be considered by A & P in determining the extent of its purchases of their products or the prices it would pay for them.

35. Advertising in Woman's Day by manufacturers of food products has no effect on the prices paid by A & P for products purchased by A & P from such advertisers for sale in A & P retail stores.

36. Whether food manufacturers do or do not advertise in Woman's Day is not considered by A & P in deciding whether or to what extent to purchase their products.

37. A & P employees engaged in purchasing and selling grocery products have no contact with Woman's Day advertising space salesmen.

38. The extent to which A & P promotes or merchandises the products of its suppliers is not affected by the fact that such suppliers do or do not advertise in Woman's Day or the extent of any such advertising.

39. At no time has any merchandising help been given to Morton by A & P by virtue of the fact that Morton advertises in Woman's Day or for any other reason, despite repeated efforts by personnel of Morton's advertising agency to obtain such merchandising help.

40. General Foods and Hunt Foods knew at all times that they could not get any merchandising support from A & P by reason of their advertising in Woman's Day.

41. In selling advertising, Woman's Day, Inc. has consistently stated to the advertiser that the purchase of advertising space in Woman's Day is completely independent of the buying or selling activities of any A & P affiliated company.

42. Each advertising rate card issued by Woman's Day, Inc. since the inception of the magazine has contained substantially the following sentence:

    "It is distinctly understood that the purchase of
  advertising space in Woman's Day has no relation,
  direct or indirect, to the buying and/or selling
  activities of any affiliated company."

43. Woman's Day has always sold its advertising space, including that sold to defendant suppliers, solely on its merits as advertising and on no other consideration.

44. Woman's Day, Inc. has consistently refused requests from grocery product advertisers that Woman's Day, Inc. supply them with promotional material or assist them in procuring store promotion and merchandising of their products.

45. Woman's Day, Inc. has extended no merchandising aid to defendant suppliers.

46. Woman's Day space salesmen have not approached anyone in the General Foods, Hunt Foods or Morton organizations outside of the personnel in the advertising department. The presentation of such representatives of Woman's Day is identical with that made in the course of their calls upon advertising agencies and does not include any suggestion or intimation that advertising in Woman's Day would in any way aid or abet the advertiser with respect to merchandising his products in A & P stores.

47. Morton at its own expense prepared so-called "shelf-talkers" to be used in connection with Morton's product displays in stores. These shelf-talkers stated that the product is "as advertised in _____ magazine." Woman's Day, Inc., however, refused permission to Morton thus to report its advertising in Woman's Day and use such shelf-talkers in A & P stores. However, permission to use such shelf-talkers was granted by Life, Good Housekeeping, and the other grocery store magazines.

48. "Woman's Day" is of comparable content and quality with the leading women's magazines such as "Good Housekeeping," "Ladies' Home Journal," "Woman's Home Companion" and "McCall's."

49. Woman's Day, Inc. is operated as a legitimate business enterprise. Its business is that of publishing a magazine to be sold on its own merits as a magazine.

50. "Woman's Day" is not a device for giving merchandising aid to A & P suppliers, nor has Woman's Day, Inc. or A & P given any merchandising aid to defendant suppliers by virtue of their advertising in "Woman's Day."

51. A & P's purchasing power is not utilized to obtain advertising for "Woman's Day" from A & P suppliers.

52. The grocery retailing business of A & P and the magazine publishing business of Woman's Day, Inc. are conducted as separate business enterprises.

53. All advertising in Woman's Day, including the advertising of the products of defendant suppliers and of A & P, its subsidiaries and divisions, is placed through independent advertising agencies pursuant to contracts between Woman's Day, Inc. and the advertising agency handling the account of the advertiser.

54. The advertising agencies that have been used by defendant suppliers are as follows:

              General Foods      Young & Rubicam, Inc.
                                 Benton & Bowles, Inc.
                                 Foote, Cone & Belding.
              Hunt Foods         Young & Rubicam, Inc.
                                 Batten, Barton, Durstine & Os-
                                   borne, Inc.
              Morton Salt        Needham, Louis & Brorby, Inc.
                                 J. Walter Thompson Co.
                                 Kenyon & Eckart
                                 Hill Blackett & Co.

55. The advertising by defendant suppliers in Woman's Day is only a small portion of the carefully planned national advertising programs for their various products which in general include other magazines, newspapers, billboards, radio, television and other media.

56. Advertising programs for the products of defendant suppliers are periodically prepared by their advertising agencies based upon studies undertaken by the latter, are considered by the appropriate company executives and, if approved by them, are executed by the agencies.

57. Defendant suppliers have placed their advertising in Woman's Day upon the recommendations of advertising agencies representing them, which recommendations are often arrived at after careful consultation between the advertising agency and the advertiser. These recommendations were based by the agencies solely upon their evaluation of Woman's Day as an effective advertising medium for the sale of the products of their respective clients to the consumer public.

58. The criteria used by the advertising agencies and executives of defendant suppliers in determining whether or not Woman's Day is to be included in a media schedule are the same ones that apply to the selection of any other magazine or medium.

59. In arriving at their advertising media decisions, the advertisers and the agencies take into consideration studies and surveys made by themselves and by others. Various factors are considered, such as circulation, number of readers, type and location of readers, cost, characteristics of the magazine and its readers, and comparisons with other advertising media.

60. G.W. Carrington, Advertising Manager of Morton, testified as follows:

    "The sole factors considered by Morton in
  determining the media in which to advertise are as
  follows, but not necessarily in the order of
  importance: (1) total circulation, (2) cost per
  thousand circulation, (3) gross cost, (4)
  characteristics of the readers (i.e., sex, age,
  education, social status, shopping functions, etc.),
  (5) geographical circulation and circulation in terms
  of population density (metropolitan areas vs. rural
  areas), both as compared with (a) Morton sales, and
  (b) total grocery stores sales, and (6) quality of
  printing reproduction.

    "Morton considers all store distributed magazines,
  including Woman's Day, only in the light of the above
  factors. Viewed in this light, Morton has considered
  this type of advertising to be very effective
  because, in terms of factor (4) above, it reaches (1)
  women only, for the most part, and (2) women who do
  the grocery shopping for their families.
  Consequently, Morton's conclusion has been that there
  is virtually no advertising waste in store magazines,
  such as probably occurs in the use of general
  publications.

    "Morton has always considered the use of all the
  store magazines simply as an integral part of its
  entire advertising program."

61. During the period from January 1, 1954, to March 31, 1956, Hunt Foods advertised Hunt's Tomato Sauce in each monthly issue of Woman's Day commencing with the October, 1954 issue through March, 1956 excepting therefrom the December, 1955 issue. It advertised Hunt's Tomato Catsup in the issues of September, October, November and December, 1955. It advertised Hunt's Tomato Paste in Woman's Day in the November and December, 1955 and January and February issues of 1956. It had no other advertisements in Woman's Day from January, 1953 to March 31, 1956, inclusive. It did not advertise any of its other products whether Hunt brand, Snider's brand or other brand in Woman's Day at any time between January 1, 1953 and March 31, 1956. None of Hunt Foods' advertisements in Woman's Day mention its Snider's brand or Pride of the Farm brand or any brand other than Hunt's.

62. The advertisements of General Foods products in Woman's Day since January 1, 1954 are as follows:

  General Foods Products       Whether, and Issue When,
                                           Advertised
                                         ------------------------

  Baker's Coconut Products               No
  Baker's Chocolate, Cocoa
    Products                             No
  Gaines Dog Foods                       No
  Log Cabin Syrups, Syrup Mixes          Mar. 1954
  Satina Laundry Products                No
  Go Laundry Products                    No
  La France Laundry Products             No
  Birds Eye Meat Pies                    Feb. 1956
  Birds Eye Fish Sticks                  Mar. 1956
  Birds Eye Frozen Foods,                Jan., Feb. 1954; Nov.
    Vegetables, Fruits                     1955; Jan., Feb. 1956.

  Birds Eye Juices                       No
  Jack & Jill Cat Food                   No
  Minute-Man Instant Frosting            No
  D-Zerta Gelatin                        No
  Jell-O Gelatin                         July, Aug., Sept., Oct.,
                                           Nov. 1955; Feb. and
                                           Mar., 1956.
  Jell-O Pudding and Pie Filling         Sept., Oct., Nov., Dec.,
                                           1954.
  Jell-O Instant Pudding                 No
  Jell-O Tapioca Pudding                 No
  Minute Rice                            Aug., 1955
  Minute Mashed Potatoes                 No
  Minute Tapioca                         No
  Swans Down Cake Flour                  Sept., Oct., Dec., 1955;
                                           Feb., 1956.
  Swans Down Cake Mixes                  Feb., Apr., 1954; May,
                                           June, 1955.
  Calumet Baking Powder                  No
  Certo Pectins                          No
  Sure-Jell Pectins                      No
  Yuban Coffee                           No
  Kaffee Hag Coffee                      No
  Maxwell House Regular Coffee           No
  Maxwell House Instant Coffee           Jan., Feb., March, 1954
  Sanka Coffee                           No
  Sanka Instant Coffee                   No
  Kool-Aid Soft Drink Powder             No
  Kool Shake Mix                         No
  Good Seasons Dressing Mix              No
  Post Cornfetti                         No
  Post Toasties Corn Flakes              No
  Post Bran Flakes                       No
  Post Raisin Bran                       No
  Post Wheat Meal                        No
  Post Grape-Nuts                        No
  Post Grape-Nuts Flakes                 July, Aug., Oct., Nov.
                                           1954
  Post Sugar Crisp                       June, Sept., 1954
  Post Sugar Krinkles                    No
  Post Tens                              May, Sept., 1954
  Postum                                 Jan., Feb., Mar., 1955
  Instant Postum                         Oct., Nov., 1954

63. Morton did not advertise any of its products in Woman's Day from 1937 through 1940 or from 1943 through 1950.

64. The inclusion or absence of advertising in Woman's Day of products of defendant suppliers handled by A & P has had no effect on the prices paid by A & P for such products.

65. Total advertising expenditures and the amount spent for advertising in Woman's Day by each of defendant suppliers from 1953 through 1955 are shown in the following table:

Total                  "Woman's Day"
Supplier         Year     Advertising                 Advertising
-----------------------------------------------------------------

  Morton         1953     $1,766,836                  $61,500
                 1954       1,943,918                    75,500
                 1955       2,342,619                    52,100
  Hunt Foods     1953       3,415,000*fn*                    —
                 1954       2,531,000*fn*               31,500
                 1955       5,741,000*fn*              229,963
  General Foods  1954      62,021,000*fn*              376,281
                 1955      62,015,000*fn*              292,945
                 1956      75,180,000*fn*              199,060


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