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
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
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
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
From the evidence. I make the following specific findings of
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:
(b) Contact specifying engineers and ...