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July 16, 1958

UNITED STATES of America, Plaintiff,

The opinion of the court was delivered by: JACKSON

This is a proceeding instituted by the United States under Section 4 of the Act of Congress of July 2, 1890, C. 647, 26 Stat. 209, as amended, and entitled 'An act to protect trade and commerce against unlawful restraints and monopolies', commonly known as the Sherman Act. It was brought in order to prevent alleged violations by the defendant, Parke, Davis & Company, of Sections 1 and 3 of the Act (15 U.S.C.A. Sections 1 and 3).

In the Complaint it is stated that the defendant, one of the nation's principal manufacturers and distributors of pharmaceutical products, engaged, with various co-conspirators, distributors of defendant's products, in an unlawful combination and conspiracy to establish, maintain, enhance and fix both wholesale and retail prices on defendant's products in interstate commerce throughout the District of Columbia and the State of Virginia in violation of the hereinabove-named sections of the Act. The alleged co-conspirators were not named as defendants.

 Plaintiff prayed that defendant be decreed to have combined and conspired as alleged; that it and all claiming to act in its behalf be perpetually enjoined from carrying out the alleged conspiracy in all respects; and that defendant be enjoined from boycotting, or attempting to boycott, any person, firm or corporation selling or advertising for sale defendant's products below its suggested resale price. Issue was duly joined by Answer of defendant.

 At the conclusion of plaintiff's case, counsel for defendant moved under Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., to dismiss the Complaint; the Court having considered the briefs of the parties, reviewed the transcript, heard oral arguments, and having concluded, upon the facts and the law, that the plaintiff had shown no right to relief, granted the motion, and judgment was ordered accordingly.

 It is apparent to the Court, from the testimony and exhibits, that defendant had well-established policies concerning the prices at which defendant's products were to be sold by wholesalers and retailers, and the type of retailers to whom the wholesalers could re-sell. It appears that defendant sold its products in the above-mentioned territory directly to retailers through its Baltimore branch in quantity lots at prices less than the retailers could buy from the wholesalers -- the latter sold to the retailers primarily in smaller quantities.

 It further appears that the sale of defendant's products as compared with the overall sales of like or similar products of other pharmaceutical concerns is very small, but that there is keen competition between its products and those of other producers. Fair Trade laws were not in effect either in the State of Virginia or in the District of Columbia during the pertinent period.

 The entire record reveals that representatives of defendant notified retailers concerning the policy under which its goods must be sold, but the retailers were free either to do without such goods or sell them in accordance with defendant's policy. Defendant's representatives likewise contacted wholesalers, notifying them of its policy and the wholesalers were likewise free to refuse to comply and thus risk being cut off by the defendant. It may be noted that every visit made by the representatives to the retailers and wholesalers was, to each of them, separate and apart from all others.

 The evidence is clear that both wholesalers and retailers valued defendant's business so highly that they acceded to its policy.

 It is apparent from what has been said herein that there was no coercion by defendant and no agreement with co-conspirators as alleged in the Complaint. Clearly, the actions of defendant were properly unilateral and sanctioned by law under the doctrine laid down in the case of United States v. Colgate & Co., 250 U.S. 300, 39 S. Ct. 465, 63 L. Ed. 992. That doctrine continues to be the law.

 Counsel for the plaintiff contends vigorously that proof of its allegations is implicit in (1) defendant's calling the attention of both retailers and wholesalers to its policy, and (2) the distributors' acquiescence to the policy. The Court cannot agree to such a nebulous deduction from the record before it.

 It was shown that defendant, in the fall of 1956, abandoned in good faith its efforts to maintain minimum resale prices in the involved territory, and, in the Court's opinion, there is no reasonable probability or danger that defendant or any other pharmaceutical company will unilaterally, or with others, strive to fix or to enforce any conditions with respect to the sale of its or their products in the State of Virginia or the District of Columbia. It is clear that, under the long-continuing competitive conditions, neither defendant nor other manufacturer or distributor of like goods could possibly attempt to do so. If they did, there could be no result other than heavy financial loss.

 It is true that the General Counsel of defendant testified that the abandonment of the required sales prices was in some measure concerned with defendant's having learned that the Anti-Trust Division of the Department of Justice was looking into its business, but he stated positively, in effect, that it was not the chief or moving factor in its action of abandonment. It is evident to the Court that the compelling reason for defendant's so doing was forced upon it by business and economic conditions in its field.

 There can be no doubt from what has been stated herein that, even if the unlawful conditions alleged in the Complaint had actually been proved, since 1956 they no longer existed, and it follows that to enjoin defendant from doing as alleged when there is nothing to enjoin, and no reason to believe, or even surmise, the unlawful acts alleged can possibly be repeated, would be an empty gesture. United States v. Hamburg-Amerikanische etc. Co., 1916, 239 U.S. 466, 36 S. Ct. 212, 60 L. Ed. 387.

 In view of the Court's opinion as hereinbefore set forth, there follows its Findings of Fact and Conclusions of Law:

 'Findings of Fact

 1. The defendant, Parke, Davis & Company (hereinafter referred to as Parke, Davis) is a corporation organized and existing under the laws of the State of Michigan, with its principal place of business at Detroit, Michigan. It transacts business and is found within the District of Columbia. It maintains a branch office at Baltimore, Maryland, to which pharmaceutical products are sent in interstate commerce from its principal plant in Michigan. These products are then distributed in interstate commerce from its Baltimore office to various drug wholesalers and retailers, including drug wholesalers and retailers in the District of Columbia and the State of Virginia. The Baltimore branch office operates in accordance with policies laid down by the Company's home office in Detroit. 2. Parke, Davis manufactures approximately 600 different pharmaceutical products, including both prescription and nonprescription items. In 1956, the total dollar volume of its sales in the District of Columbia and Richmond, Virginia, was as follows: To Retailers To Wholesalers District of Columbia $ 499,304 $ 161,247 Richmond, Virginia $ 58,870 $ 113,651


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