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April 16, 1965


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

  This is a suit for treble damages based upon alleged violations of the Robinson-Patman Act, 15 U.S.C. § 13(a) (the Act). The plaintiff, Loren Specialty Mfg. Co., Inc., is an Illinois corporation which acts as sales representative or distributor for various manufacturers that sell in the Chicago area; the plaintiff conducts certain of its business under the trade name of Meyer-Ekstrom Company.

The defendant Clark Manufacturing Company (Clark) is an Ohio corporation which sells its products in the Chicago area, as well as nationally. Clark manufactures steam specialties, such as steam traps, reducing valves, strainers and separators.*fn1

The defendant Robert F. Gleason (Gleason) is a citizen of Illinois who transacts business in Illinois under the name of Gleason Equipment Company. In December, 1955, Gleason was appointed by Clark to be its sales representative for the Chicago area.

The defendant Arnold A. Hanson (Hanson) is a citizen of Illinois who transacts business in Illinois under the name of Industrial Process Equipment Company. In January, 1956, Hanson was hired by Gleason to supervise the Clark account, as well as various accounts in allied lines. In March of 1957, Hanson went into business for himself and succeeded Gleason as the Clark representative for the Chicago area.

Plaintiff argues that, while it was the exclusive distributor for Clark in the Chicago area from 1945 to 1955, it established relationships with many purchasers of steam specialties who purchased from the plaintiff on a regular basis. While the plaintiff was the exclusive distributor, it received a better price from Clark than any other purchaser in its area. However, when Gleason was appointed, the plaintiff no longer received any discount in excess of the distributors' discount, but Gleason received the distributors' discount and an additional discount. It is alleged that Gleason then sold to the plaintiff's previous customers at the same price which the plaintiff was receiving. For this reason, it is alleged, the plaintiff was not only unable to compete with Gleason, but also Gleason intentionally took away the plaintiff's former customers by giving them the same discount as was being given to the plaintiff.

Plaintiff alleges that the defendants violated the Act because Clark sold its products to Gleason and Hanson at lower prices than Clark charged the plaintiff for the same products. Two central issues arise in this case regarding liability. The first is whether there were "sales" to Gleason and Hanson within the meaning of the Act, and the second is, if there were "sales," whether the prices charged Gleason and Hanson represented bona fide functional discounts.

The defendants argue that Gleason and Hanson, called sales representatives, acted as agents for Clark in most of the transactions questioned by plaintiff. They further contend that, even if the Court finds that sales took place, the Court should find that Gleason and Hanson were operating at a different competitive level than the plaintiff in Clark's distributive scheme, so that they were not competitors of the plaintiff, within the meaning of the Act.

On the other hand, the plaintiff argues that the transactions involving Gleason and Hanson were sales, if not in form, then in substance; it contends that Gleason and Hanson were competing on the same level by selling to the same customers that bought from the plaintiff before it lost its exclusive distributorship.

This Court has jurisdiction of the plaintiff's suit based upon the anti-trust laws of the United States, 15 U.S.C. § 13, 15, and 28 U.S.C. § 1337.

A trial was held by the Court, sitting without a jury, upon the complaint of the plaintiff. This is being written upon the basis of three days of trial, the evidence adduced therein, as well as post-trial briefs and the proposed findings of the parties.

From the evidence. I make the following specific findings of fact:

1.  The plaintiff acted as exclusive distributor in the
Chicago area for Clark from approximately 1945 to November,
1955. Ciark's prices to plaintiff were stated in terms of the
list price minus certain discounts; specifically, the
plaintiff purchased Clark products at the distributors'
discount, less an additional 10 and 5 per cent.
2.  While exclusive distributor for Clark, the plaintiff
purchased products from Clark and resold them to its
customers. The plaintiff sent its orders to Clark, who then
billed the plaintiff; Clark would then send the products
either to the plaintiff or to the plaintiff's customer, as the
plaintiff directed. The plaintiff billed its own customers and
assumed all credit risks.
3.  On September 19, 1955, Clark terminated its contract
with the plaintiff by giving sixty days' notice as provided by
the contract between the plaintiff and Clark; in that letter,
Clark offered the plaintiff the opportunity to continue to
sell Clark products as a distributor, which the plaintiff
4.  On November 14, 1955, Clark entered into a written
agreement appointing Gleason sole sales representative in. the
Chicago area; the agreement was subject to termination by the
notice of either party. The following portions of the
agreement are at issue in this litigation:
  "We will sell to you at discounts of 10% and 5%
  from the price to be paid by distributors as
  determined by our Schedule LP-6551, -2, -3, and
  -4 now in effect, or from any revision thereof in
  effect at the time of receipt of your order. You
  will resell Clark steam specialties so purchased
  only at the prices and upon the standard terms
  established by us, unless you first obtain our
  written consent to sales at different prices or
  upon different terms.
  "On all orders taken by you and billed by us, and
  on all other orders received from your territory
  and accepted by us calling for delivery within
  said territory during the existence of this
  arrangement, and as full compensation for all of
  your obligations hereunder, we will, subject to
  the provision for division of commissions
  specified following, pay to you the difference
  between the net price (without deduction of any
  cash discount) received by us therefrom and the
  price at which the same goods could have been
  purchased by you as specified above."
5.  A superseding agreement was entered into by Gleason and
Clark on April 2, 1956; the two agreements are essentially the
6.  Gleason hired Hanson in January, 1956, to supervise his
Clark account. In March, 1957, Hanson, operating on his own
behalf, succeeded Gleason as Clark's Chicago area sales
representative. Hanson and Clark operated under an agreement
which is essentially the same as Clark used with Gleason.
7.  Under the contract, the sales representative was to
promote the sale and use of Clark products. The representative
was to do the following:

(a) Set up distributors,

(b) Contact specifying engineers and ...

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