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TIMKEN CO. v. U.S. CUSTOMS SERV.

February 26, 1981

The TIMKEN COMPANY, Plaintiff,
v.
U.S. CUSTOMS SERVICE, et al., Defendants



The opinion of the court was delivered by: GREEN

MEMORANDUM OPINION

This action arises under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, et seq. Plaintiff seeks access to records of the United States Customs Service (USCS) concerning its investigation of the value of tapered roller bearings and components imported from Japan. The materials in question have been withheld from plaintiffs on the basis of Exemptions 2, 4, 5 and 7(A) of the FOIA, 5 U.S.C. § 552(b)(2), (4), (5) and 7(A). Plaintiff does not contest the documents withheld pursuant to Exemption 2.

 Eighty-three documents were initially located by USCS. Fifty-six documents remain in issue. Twenty-four documents have been withheld entirely, while thirty-two documents have been withheld in part. USCS compiled the documents in connection with its responsibility to value the imported merchandise, tapered roller bearings, and assess customs duties pursuant to 19 U.S.C. § 1402. Imported roller bearings must be valued for assessment of ordinary duty at foreign or export value and, if both are known, at the higher of the two. This value is usually determined by a Customs officer based on commercial information supplied by the importer. 19 U.S.C. § 1402(a)(1), (2), (3) and (4): Treasury Decision 54521. In rare instances, however, including the present case, when the Customs officer suspects that all the proper information has not been supplied to him by the importer for his value determination, he may commence a value investigation.

 The case is currently before the Court on cross-motions for summary judgment. The Court releases in part and withholds in part the documents claimed exempt pursuant to 5 U.S.C. §§ 552(b)(4) and 7(A), and withholds in total the documents claimed exempt pursuant to 5 U.S.C. § 552(b)(5).

 1. Exemption 4

 USCS has withheld the vast bulk of the documents pursuant to Exemption 4. Exemption 4 protects from mandatory disclosure trade secrets and commercial or financial information which is obtained from a person outside the government and is privileged or confidential. Gulf & Western Industries, Inc. v. United States, 199 U.S. App. D.C. 1, 615 F.2d 527, 529 (D.C.Cir.1979). Plaintiff concedes that the documents were obtained from a person, are commercial or financial information within the meaning of Exemption 4, and were not privileged. The disputed issue is whether or not the documents contain confidential information.

 
if disclosure of the information is likely to have either of the following effects: (1) to impair the Government's ability to obtain necessary information in the future, or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.

 National Parks and Conservation Ass'n. v. Morton, 162 U.S. App. D.C. 223, 498 F.2d 765, 770 (D.C.Cir.1974).

 The information withheld pursuant to Exemption 4 contained detailed financial and commercial information about the pricing and marketing of Japanese tapered roller bearings for the time period 1968 to 1976. Specifically, it includes (1) value determinations by the U.S. Customs officers of imported tapered roller bearings, (2) invoice unit prices and total invoice prices of bearings sold at home and for export to the United States, (3) quantities of bearings sold at home and for export to the United States, (4) customs duty amounts calculated for sales of bearings, and (5) pricing practices and policies and marketing channels of Japanese manufacturers regarding export sales to the United States and home sales.

 The USCS asserts that the release of this material is likely to cause substantial harm to the competitive positions of the companies from whom the information was obtained. Competitors could selectively underprice these companies, estimate profit margins and the supply and marketing weaknesses of these companies and target their weak points for attack. Customers could use the information relating to sales to other customers as leverage to obtain lower prices or increased discounts. The USCS supports its position with an affidavit from a Japanese exporter and letters from the counsel of the Japanese company and their related American importers of tapered roller bearings.

 Plaintiff argues that this information is too antiquated and fragmented to be of competitive significance as over 75% of it concerns data from the period 1968-1973.

 The Court finds the arguments of the Japanese manufacturers are valid. It notes, however, that the affidavit and letters presented were prepared originally for other FOIA suits *fn1" which Timken has filed and pertain to commercial and financial data from 1973 and 1975 to 1979. *fn2" USCS has not met its burden of proof to establish that the pre-1973 data warrants protection.

 Furthermore, the economic changes in the last decade have been far-reaching, encompassing changes in the overall economic market due to fluctuating exchange rates and the inflationary spiral and in the specific roller bearing market. Marketing strategies and the costs of production in the roller bearing market have been varied. These changes make information from the late 1960's and early 1970's, which was originally quite sensitive business data, of marginal value in the 1980's. For a company to base its plans on projections from 1970 data would probably be ineffective and perhaps harmful. Accordingly, the Court finds that ...


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