Crown Zellerbach Corporation v. Federal Trade Commission

Ninth Circuit

Crown Zellerbach Corporation v. Federal Trade Commission

296 F.2d 800, 1961 U.S. App. LEXIS 2888, 1961 Trade Cas. (CCH) 70,178

CourtCourt of Appeals for the Ninth Circuit

DecidedDecember 22, 1961

Docket15904_1

StatusPublished

Cited by48 cases

This text of 296 F.2d 800 (Crown Zellerbach Corporation v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Crown Zellerbach Corporation v. Federal Trade Commission, 296 F.2d 800, 1961 U.S. App. LEXIS 2888, 1961 Trade Cas. (CCH) 70,178 (9th Cir. 1961).

Pincite

Opinion

POPE, Circuit Judge.

In June, 1953, the petitioner Crown Zellerbach Corporation acquired the stock and assets of St. Helens Pulp and Paper Company. On February 15, 1954, the Federal Trade Commission filed a complaint against the petitioner charging that such acquisition of St. Helens by Crown Zellerbach was a violation of § 7 of the Clayton Act, (15 U.S.C.A. § 18) as amended and approved December 29,1950, 1 in that “the effect of the aforesaid acquisition by respondent [Crown Zellerbach] of control of St. Helens may be substantially to lessen competition or to tend to create a monopoly in the lines of commerce, as ‘commerce’ is defined in the Clayton Act, in which respondent and St. Helens were engaged in the Western States and more particularly in the Pacific Coast States of the United States, and in each of them.”

After answer was filed admitting the acquisition but denying that such acquisition violated § 7 of the Act, hearings were held before an Examiner from January 10, 1955 to November 20, 1956. The Examiner found that the allegations of the complaint had been sustained. Upon appeal the Commission made findings of its own modifying certain of the findings of the Examiner, but adopting the Examiner’s conclusions that the acquisition “had the effect of substantially lessening competition and tending to create a monopoly in the relevant line of commerce in violation of Section 7 of the Clayton Act, as amended.” A final order of divestment was issued December 26, 1957, and this petition for review followed.

Both Crown Zellerbach Corporation, here called Crown, and St. Helens Pulp and Paper Company, here called St. Helens, were corporations engaged in the manufacture of pulp and paper and the sale of paper and paper products through much of the West. 2 At the time of the acquisition of St. Helens, Crown was the *804 largest pulp and paper company in that area and one of the largest in the nation, It carried on a fully integrated operation from timber lands and logging operations through the production and distribution of paper and paper products. It had timber holdings consisting of approximately 500,000 acres owned in fee in Washington and Oregon and cutting rights on approximately 20,000 acres, managing its timber lands on a sustained yield basis. Zellerbach Paper Company, a wholly owned subsidiary, was a large seller of paper products, the larger portion of which were bought from Crown. 3

In 1953 Crown produced pulp and paper at its mills in Oregon and Washington. These were located at Camas, Washington; West Lynn, Oregon; Port Angeles, Washington; Lebanon, Oregon; and Port Townsend, Washington. During the time this case was under consideration before the Commission, it was preparing for production at another mill at Antioch, California. It owned 99 percent of Crown Zellerbach Canada, Limited, a fully integrated pulp and paper mill in Canada, and also had large timber holdings in Canada. It had facilities for converting portions of its paper production into paper products at some of the mills above listed, and also at Harlingen, Texas; North Portland, Oregon; and San Leandro and Los Angeles, California. While the case was pending before the Commission it acquired through another merger mills at Bogalusa, Louisiana; Baltimore, Ohio, and Dresden, Ohio.

St. Helens was also a fully integrated pulp and paper mill having a capacity of 180 tons of paper a day. It had 117,000 acres of high quality timber land and important cutting rights. Its mill was located at St. Helens, Oregon.

In making its inquiry as to whether the merger here accomplished fell within the prohibition of § 7, the Commission was confronted initially with the task of determining what was the relevant market, both as respects products and as concerns geographical area. This was a necessary step precedent to determining whether within that market there was a probability that the effect of the acquisition of St. Helens by Crown would be substantially to lessen competition or to tend to create a monopoly. The Commission held that “the coarse paper line relating generally to coarse wrapping papers, bag and sack papers and convertible papers is a sufficiently distinct product line to be a ‘line of commerce’ within the meaning of Section 7.” With respect to geographical market, it held that “the Eleven Western States, 4 as found by the hearing examiner, is an appropriate section.”

In order to review those determinations we must first inquire, after an examination of the record, as to the products with respect to which Crown and St. Helens competed, and the location and area of that competition. The question is just where these parties met in the paper and paper product market,

jn general, grades of paper fall withjn three separate categories: namely, coarse, fine and newsprint. St. Helens was a coarse paper producer. Crown produced and sold a very complete line 0f paper and paper products, many of which were not produced or sold by St. Helens. Included in this line were newsprint, groundwood paper, machine-coated printing and converting paper, and fine paper. On the other hand, both Crown and St. Helens produced and sold, in competition with each other certain varieties of coarse papers including wrapping paper, shipping sack paper, bag paper, envelope paper, gumming paper, waxing paper, and other converting paper.

Generally speaking, in the trade and in the classifications of paper listed by the Bureau of Census, all coarse papers known to the trade are listed in various groups. What these are are disclosed in *805 the petitioner’s brief under Table VI which shows the production in the United States in. th.e year 1953 of all trade coarse paper. That table is as follows:

“Table VI

1953 Trade Coarse Paper Production in the United States by Census Classifications and Principal Grades Thereof

(Tons of 2,000 Pounds) , United States

Total Trade Coarse Paper....................... 17,749,333

Census coarse paper.............................. 3,392,000

Wrapping paper ............................. 634,409

Shipping sack paper.......................... 749,443

Bag paper .................................. 895,949

Envelope paper .............................. 119,746

Gumming paper ............................. 94,541

Waxing paper ............................... 223,177-

Other converting paper....................... 516,413

Other ...................................... 158,322

Census special industrial paper.................... 554,396

Tabulating card stock ........................ 118,653

File folder stock............................. 25,718

Log stock ................................... 104,507

Vulcanizing fibre stock ....................... 28,668

Resin impregnated stock...................... 38,862

Other ......................................

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