Full opinion text
OPINION HIGGINBOTHAM, District Judge. I. PRELIMINARY STATEMENT In this civil action the plaintiff, the United States of America, seeks to restrain and enjoin alleged violations of Section 1 of the Sherman Antitrust Act by the defendant, FMC Corporation (hereinafter FMC). Briefly summarized the complaint charges that, beginning in at least 1955, FMC and several other members of the so-called “chlor-alkali” industry engaged in a combination and conspiracy, which had as its object the elimination of price competition in the sale of chlorine, caustic soda and soda ash. The conspiracy is alleged to have taken the form of meetings, informal discussions, telephone calls and written correspondence. The complaint further alleges that the effect of the combination and conspiracy has been to unreasonably restrain interstate commerce by restricting and controlling competition among the co-conspirators; and the plaintiff therefore prays the Court to issue an injunction prohibiting further activities in pursuance of the conspiracy. The principal manifestations of the conspiracy were alleged to be: (1) Discussions and communications among the alleged conspirators leading to agreements to raise the prices of chlorine, caustic soda and soda ash in 1955 and 1956; of dry caustic soda in 1958; and of chlorine in 1960. (2) Collusive efforts in 1958 and 1960 to maintain at an artificially high level the previously (1956) fixed list price of liquid caustic soda, by means of tacit agreements to restrict discounts to selected industries and users. (3) Collusive attempts to maintain and perfect the freight equalization system used by the industry from a period of at least 1954 through 1958; (a) by conspiring not to recognize Linden, New Jersey, as an equalization point for chlorine and caustic soda; (b) by exchanging truck and barge rates which were not public information; (c) by agreeing on minimum quantities which would entitle customers to lower barge rates; and (d) endeavoring to eliminate any disparities in practice which might detract from the quotation of identical freight rates. The complaint as originally filed on December 24, 1964, named as defendants FMC and eight other chlor-alkali producers. But, prior to trial the eight defendants other than FMC entered into consent decrees with the plaintiff, thereby settling the proceedings against them, without however admitting the substantive allegations of the. complaint. FMC, as it had the right, elected to go to trial, denying in all material respects the allegations of the complaint. The case was tried by the Court without a jury in a trial which lasted nineteen days. Diligent effort by counsel for both sides resulted in several stipulations which greatly facilitated the presentation of documentary evidence, thereby expediting trial of the issues. At trial an issue arose concerning the admissibility as substantive evidence in this case of testimony given by one of the plaintiff’s key witnesses before a federal grand jury which investigated the chlor-alkali industry in 1961 and 1962, but failed to bring indictments. The court denied the plaintiff’s motion to introduce the testimony as substantive evidence of the matters asserted therein under the past recollection recorded exception to the hearsay rule; but so that, if the case is appealed, the reviewing court may have the benefit of knowing what the court’s findings would have been had the testimony been admitted into evidence, the court, pursuant to Rule 43(c), F.R.Civ.P., and by agreement of counsel, made additional alternative findings based upon the excluded testimony. The court, after giving careful consideration to the pleadings and evidence, including exhibits and stipulations, the memoranda and briefs submitted by the parties, and the oral arguments of counsel, concludes that, with respect to certain elements charged in the complaint, the Government has sustained its burden of proving that there existed a combination and conspiracy which had as its purpose and effect the elimination of price competition in the sale of chlor-alkali products; but as to other elements of the complaint the Government failed to sustain its burden. In support of that holding, the Court now makes the following Findings of Fact and Conclusions of Law, separately stated. II. FINDINGS OF FACT A. GENERAL FINDINGS. (1) Defendant FMC Corporation is organized and exists under the laws of the State of Delaware and has its principal place of business and main office in San Jose, California. (2) Jurisdiction of the subject matter duly appears and proper venue of the defendants is not contested. (3) Except as otherwise stated or required by context, the facts herein found occurred or existed within the period from January 1, 1955 to December 24, 1964 (hereinafter referred to as the “period covered by the Complaint”), and occurred or existed within, and are limited to, the area of the Continental United States generally east of the Rocky Mountains. (4) The three “chlor-alkali” commodities — chlorine, caustic soda and soda ash —to which the allegations of the complaint refer, are sold and shipped in interstate commerce by the defendant FMC Corporation and by the other producers thereof with whom FMC competes in such commerce. (5) Although dismissed as parties to this action the eight other former co-defendants listed below were alleged by the government to be co-conspirators with FMC, and, for purposes of brevity, will be referred to hereinafter by the following abbreviated terms: Allied Chemicals Corporation .....................Allied Diamond Alkali Company ......................Diamond Dow Chemical Company ............................Dow Hooker Chemical Corporation ....................Hooker Olin Mathieson Chemical Company...................Olin Pennsalt Chemicals Corporation..................Pennsalt Pittsburgh Plate Glass Company ......Columbia Southern Wyandotte Chemicals Corporation..............Wyandotte (6) As it has been used throughout the trial pursuant to the stipulation of the parties, the term “list price” as used in these findings means the sellers F.O.B. plant price for sales in the area of the Continental United States generally east of the Rocky Mountains, exclusive of freight charges, as announced by the seller (and this verb as herein used shall mean announced, publicized, circulated or made available to its sales personnel for open quotation) by one of the following means: (a) Distributing to the trade generally sheets setting forth the price lists; (b) Informing the trade press, such as the “Oil, Paint and Drug Reporter”, of its list prices; or (c) Distributing to its own sales organization an internal price book or price book sheet setting forth the list prices with authority to its salesmen to quote such prices openly and generally. B. THE PRODUCTS AND THE BASIC CHARACTERISTICS OF THE CHLOR-ALKALI INDUSTRY. (7) The principal products of the chlor-alkali industry, and those involved in the present action, are chlorine, caustic soda and soda ash. The products are basic industrial chemicals having a wide variety of uses. (8) Chlorine is one of the chemical elements. While there are chemical processes for the recovery of chlorine from various of the compound forms in which it occurs in nature, about 93% of the commercially produced chlorine in recent years has been produced by the electrolysis of ordinary salt (NACL). Salt brine is placed in “cells” through which an electric current is passed, resulting in the decomposition of the salt and the production of chlorine gas, some hydrogen gas and a solution of caustic soda (NAOH). By this process, the production of one ton of chlorine is accompanied by the production of 1.1 tons of caustic soda. The cells used in the electrolytic process are of various designs, improvements having been introduced and licensed to others by Hooker, Diamond Alkali, Columbia Southern and Dow. A predecessor of the Olin Mathieson Chemical Corporation introduced a mercury cell which has been extensively used in recent expansions of electrolytic chlorine production because the caustic soda it produces may be used directly in the rayon industry without further purification. Among other uses, chlorine is utilized in water purification, bleaching, pulp and paper, general germicides and deodorants and in the manufacture of inorganic chlorides. (9) Caustic soda (Sodium Hydroxide —NAOH) is co-produced with chlorine in the electrolysis of salt, in the proportion of 1.1 tons of caustic soda to one ton of chlorine. This method has steadily replaced the former common method of producing caustic soda by the reaction of slaked lime (calcium carbonate) with soda ash (sodium carbonate), until by 1965 it was estimated to account for 98% of the caustic soda produced. In the electrolytic process an electric current is passed through a salt brine solution in specially designed cells. The salt brine is decomposed by the current to form a 10% to 12% sodium hydroxide solution, with hydrogen gas forming at the cathode and chlorine gas at the anode as co-products. Further processing of the sodium hydroxide solution removes impurities and residual undecomposed salt and some of the water so as to produce a concentrated solution of 50% or 70%-74% sodium hydroxide. For general industrial purposes, the recognized grades are “commercial” and “rayon”. Liquid caustic soda is used, among others, in the manufacture of viscose rayon, paper pulp, soap, dyes, water softening compounds, chemical intermediates, and in many other industries and processes. (10) Anhydrous (or dry) caustic soda is a dehydrated form of the more common and more widely used liquid caustic soda. The further processes necessary to convert liquid caustic soda into dry caustic soda include precipitation of impurities and essentially complete evaporation of all remaining water by heating in fusion pots. Dry caustic soda is commonly delivered in commerce in drums, either-in solid mass (700 pounds to the drum) or in flake form (400 pounds to the drum). (11) Soda ash (Sodium Carbonate) is a basic industrial intermediate chemical. The major production of soda ash historically has been by the ammonia-soda or Solvay process, a chemical procedure involving the reaction of saturated salt brine with ammonia and carbon dioxide. Other methods are the mining and treating of natural deposits of trona ore (sodium sesquicarbonate) to obtain sodium carbonate (the method used by F MC); and the electrolytic method involving the treatment of the diluted caustic liquor from chlorine-caustic cells, to produce a sodium 'bicarbonate solution from which soda ash is made. In 1962, the ammonia soda process accounted for 80% of the soda ash production, natural soda for the balance. Since 1935 no new plants have been constructed in the United States for production of soda ash by the Solvay process and other methods of production have been increasing their share of production. Soda ash is used, among others, in the manufacture of glass, paper and pulp, soap, detergents, aluminum and other chemicals and water treatment. (12) Chlorine, caustic soda and soda ash are interrelated on the basis of production, pricing and use. They are basically homogeneous products. Although there may be different grades of a given product, e.g., light and dense soda ash, or regular grade and rayon grade caustic soda, the number of different grades is small and within a given grade there is no commercially significant variation in quality or character as among the various producers. (13) Much of the use of both caustic soda and soda ash is for their sodium oxide (Na20) yield, since sodium oxide is one of the chief basic alkalyzing agents. Commercial soda ash contains from 48% to 58% sodium oxide depending on the grade. The common commercial grades of caustic soda contain sodium oxide in percentages ranging from 60% to 76%. Consequently, depending on the relationship of the prices which the customers must pay for quantities of soda ash and caustic soda yielding equal amounts of sodium oxide, and on necessary capital investment in process and equipment needed to convert from soda ash to caustic soda, or vice versa, several industries are potential users of either product. The soap and detergent industry, the glass industry and the aluminum industry have in some degree either made or proposed making a switch from one product to another. (14) End use consumers account for a relatively small fraction of the total annual purchases of chlor-alkali commodities. These materials are purchased ordinarily by manufacturers for use as basic or intermediate raw materials in the production or compounding of other materials, or as solvents or alkalyzers in various manufacturing and converting processes. (15) The major portions of chlor-alkali sales are made to large buyers of the products, such as soap manufacturers, aluminum companies, pulp and paper plants, glass manufacturers and other chemical companies on long term contracts, generally of a year or more. These contracts, usually contain “price notification” and “price protection” clauses. The former requires the supplier to give the buyer notification of any price increases within a specific period of time prior to the effective date of the increase. The latter provides that if the buyer receives a better offer from another supplier for the same amount of the same product, the contracting supplier must, when notified of the offer, meet it within a specified period of time or the buyer will be excused from the terms of the contract. Contracts also provide that price changes may be made only quarterly, i. e., January, April, July, October. (16) Most large corporate buyers of chlor-alkali products are represented in sales negotiations by purchasing agents knowledgeable of the market and its conditions, and generally have two or more suppliers of the same product even though one supplier might be able to supply all of the buyer’s requirements for that product. The reasons for this practice are to protect the buyer against strikes or other disruptions in his supply and transportation of these products, and to have enough suppliers to maintain a favorable bargaining position in seeking the best possible contract terms. (17) The stipulated evidence shows that, except at times when the published list prices of chlor-alkali products offered in the merchant market were being changed, or when efforts to change such prices were being made by various of the chlor-alkali producers, by public announcement of price changes, the published list prices of all domestic chloralkali products sold East of the Rocky Mountains were uniform at any given time during the period covered by the complaint. (18) During the period covered by the complaint substantial portions of chlor-alkali sales of various of the producers were made at off-list prices, either in the form of individual price concessions to selected customers, or as price discounts to customers in a particular industry, such as rayon or pulp manufacturing. (19) Generally speaking, demand for chlor-alkali products is inelastic in nature. Since there is little market for chlor-alkali products as end products, demand is normally determined by conditions of the various markets for the products which are produced through use of chlor-alkalis. For this reason a market move or condition which directly affects only chlor-alkali products, such as price discounts by .individual producers, while it may affect their share of the market, will have only an indirect effect on total demand. Thus, elasticity of demand in the case of chlor-alkali products is largely confined to the cross-elasticity of demand between caustic soda and caustic ash noted in Finding 13. (20) During the period covered by the complaint, caustic soda was chronically in long supply, due to the fact that its increased output was largely attributable to increased demand for its co-product chlorine. Therefore, finding additional uses for caustic soda was a recurring problem for the industry. (21) In 1960 FMC and the eight former co-defendants were the top nine producers of chlor-alkali products, except that Hooker and Pennsalt had no soda ash capacity. Collectively, they controlled 82% of the United States chlorine capacity; 88% of the caustic soda capacity and over 95% of the soda ash capacity, and total combined sales of these chlor-alkali products by these nine companies was of similar magnitude. C. FINDINGS AS TO FMC CORPORATION (22) FMC Corporation, organized under the laws of Delaware, has its principal place of business and main office in San Jose, California, and offices which serve as the operating headquarters of its chemical divisions in New York, New York. It is owned by approximately 38,-000 stockholders, the largest of which owns less than one per dent of its capital stock. It is a diversified manufacturing company producing a number of lines of machines, mechanical equipment and parts, tools and agricultural, household, industrial and miscellaneous chemicals. Included among the more than 150 chemical products are chlorine, caustic soda and soda ash, which in 1964 accounted for slightly less than four per cent of its total sales. (23) In 1960 FMC’s total sales of all products was about Three Hundred and Fifty Million Dollars ($350,000,000), with chlor-alkali products accounting for over Twenty Million Dollars ($20,000,-000), over four per cent (4%) of combined industry shipments of such products for that year considered on a national basis. FMC’s Twenty Million Dollars ($20,-000,000) of sales of chlor-alkali products in 1960 were accounted for as follows: Soda Ash ............ $9.5 (million) Liquid Caustic ........ 8.0 Liquid Chlorine........ 2.4 Dry Caustic........... 0.6 (24) FMC entered the chlor-alkali field in 1948 when it acquired the Westvaco Chemical Corporation, which had a plant for the production of chlorine and caustic soda at South Charleston, West Virginia, and began a plant for processing trona into soda ash at Green River, Wyoming. (25) During the period covered by the complaint FMC produced chlorine and caustic soda at its plant in South Charleston, West Virginia, and soda ash at its plant at Westvaco, Wyoming; except that, several years ago (the date does not appear in the evidence) FMC discontinued the production of dry caustic soda. (26) In 1952, the Westvaco organization was reconstituted within the FMC corporate structure as two chemical divisions: a “Mineral Products Division” handling the production and sale of phosphates, phosphorous, magnesium and barium products; and a “Westvaco Chlor-Alkali Division” handling the production and sale of the products produced at South Charleston, West Virginia and Green River, Wyoming. Frank Farley was made general manager of the new chlor-alkali division. (27) In 1954 Arthur F. Smith was made sales manager of the Chlor-Alkali Division. Mr. Smith had been with the FMC chemical division and its predecessor Westvaco Chemical Company since 1941. Prior to becoming sales manager, Mr. Smith occupied successive positions as salesman, district manager, product manager and assistant sales manager. As sales manager, Mr. Smith’s responsibilities included among others, assisting in formulating sales policy, and making and passing on recommendations for the pricing of chlor-alkali products. During his tenure as sales manager, 1954 through April, 1958, Mr. Smith reported directly to Mr. Farley and to Mr. Farley’s successor as general manager, Mr. Frederick Gilbert. (28) As sales manager, Smith was an executive of sufficient responsibility to FMC to render it liable for his acts if he engaged in activities prohibited by the Sherman Antitrust Act. (29) In April, 1958, a further reorganization of FMC’s chemical divisions was carried out. An Inorganic Chemicals Department was created with three subordinate chemicals divisions, one of which was the Chlor-Alkali Division. Fred Gilbert was promoted from General Manager of the Chlor-Alkali Division to Corporate Vice-President and General Manager in charge of the Inorganic Chemical Department. Donald C. Oskin was promoted from Sales Manager, Mineral Products Division to Vice-President in charge of sales for the Inorganic Chemicals Department. Arthur Smith was discharged from his position as sales manager of the Chlor-Alkali Division, and his employment with FMC was terminated. (30) As of 1957, FMC’s rank among domestic producers of the chlor-alkali commodities, in terms of production capacity and total shipments, and its approximate percentage share of the domestic totals were as follows: CAPACITY SHIPMENTS Rank Percent Rank Percent Chlorine 9th 3.8 8th 5.6 Caustic Soda 9th 3.7 8th 4.3 Soda Ash 6th 7.5 6th 7.3 D. THE 1955 AND 1956 CHLORALKALI PRICE INCREASES. (31) On August 19, 1955, Dow announced a $2.00 per ton Eastern list price increase for liquid caustic soda, raising its list price to $56.00 per ton, single unit tank cars, F.O.B. plant, regular grade, 50% NaOH; to $58.00 per ton single unit tank car, F.O.B. plant regular grade, 70%-74% NaOH; and to $60.00 per ton single unit tank car, F.O.B. plant, rayon grade, 70%-74% NaOH; all to be effective for contract sales on October 1, 1955, and effective for spot sales immediately. Within approximately twenty-one days after this announcement all of the other domestic producers of chlorine, including FMC, increased their respective list prices by the same amount as Dow, effective for contract sales on October 1, 1955, and effective for spot sales on, variously, the dates of the respective announcements, the effective date for contract sales, or some date between those dates. (32) On August 19, 1955, Dow announced a $5.00 per ton Eastern list price increase on anhydrous caustic soda, raising its list prices of solid caustic soda to $82.00 per ton, 700 pound drums, carload lots, F.O.B. plant and flake caustic soda to $90.00 per ton 400 pound drums, carload lots, F.O.B. plant, to be effective for contract sales on October 1, 1955 and effective for spot sales immediately. Within approximately twenty-one days after this announcement, all domestic merchant producers, including FMC and its former co-defendants, increased their respective list prices by the same amount as Dow, effective for contract sales on October 1, 1955 and effective for spot sales on, variously, the dates of the respective announcements, the effective dates for contract sales, or some date between those dates. (33) On September 2, 1955, Columbia-Southern announced a $2.40 per ton list price increase on chlorine, raising its list price to $61.00 per ton single unit tank car, F.O.B. plant, to be effective for contract sales on October 1, 1955, and effective for spot sales immediately. On the same date, and with the same effective dates for contract and spot sales, Columbia-Southern also announced an increase in list price to $78.40 per ton, F.O.B. plant, for chlorine shipped in multiple unit tank cars in lots of 75 tons or more. FMC and its alleged co-conspirators (except Wyandotte and Dow with regard to multiple unit tank cars, since they do not ship chlorine by this method) as well as all other domestic producers of chlorine, later increased their respective list prices by the same amounts as Columbia-Southern, effective for contract sales on October 1, 1955, and effective for spot sales on, variously, the dates of the respective announcements, the effective date for contract sales, or some date between those dates. (34) On August 19, 1955, Allied announced a $2.00 per ton list price increase on soda ash, raising its list prices for carload lots, railroad bulk hopper cars, to $29.00 per ton, F.O.B. plant for light ash and $30.00 per ton, F.O.B. plant for dense ash, to be effective for contract sales on October 1, 1955, and effective for spot sales immediately. On the same date and with the same effective dates for contract and spot sales, Allied also announced an increase in list prices to $1.75 per 100 pound paper bag, F.O.B. plant, for light soda ash and to $1.80 per 100 pound bag, F.O.B. plant, for dense soda ash. Within approximately fourteen days after this announcement all domestic producers of soda ash, including FMC and its alleged co-conspirators (except Pennsalt, which did not produce soda ash) increased their list prices by the same amount as Allied (except Hooker, with regard to bulk hopper car sales which it did not make), effective for contract sales on October 1, 1955, and effective for spot sales on, variously, the dates of the respective announcements, the effective date of contract sales, or some date between those dates. (35) The next change in list prices occurred on August 28, 1956, when Columbia-Southern announced a $2.00 per ton Eastern list price increase on chlorine, raising its list price to $63.00 per ton, single unit tank cars, F.O.B. plant, to be effective for contract sales on October 1, 1956, and effective for spot sales immediately. On the same date, and with the same effective dates for contract and spot sales, Columbia-Southern also announced an increase in Eastern list price to $81.00 per ton, F.O.B. plant for chlorine shipped in multiple unit tank cars in lots of 75 tons or more. All of the merchant producers who were selling chlorine in single or multiple unit tank cars later increased their respective Eastern list prices by the same amounts as Columbia-Southern, effective for contract sales on October 1, 1956, and effective for spot sales on, variously, the dates of the respective announcements, the effective date for contract sales, or some dates between those dates. (36) In early September, 1956, Dow announced a $2.00 per ton Eastern list price increase on liquid caustic soda, raising its list price to $58.00 per ton, single unit tank car, F.O.B. plant, regular grade 50% NaOH; to $60.00 per ton, single unit tank car, F.O.B. plant, regular grade 70%-74% NaOH; to $60.-00 per ton, single unit tank car, F.O.B. plant, rayon grade 50% NaOH; and to $62.00 per ton, single unit tank car, F.O. B. plant, rayon grade, 70%-74% NaOH; all to be effective for contract sales on October 1, 1956, and effective for spot sales immediately. Within approximately fourteen days after this announcement all of the merchant producers who were selling liquid caustic soda in any of those grades and solutions increased their respective list prices by the same amount as Dow, effective for contract sales on October 1, 1956, and effective for spot sales on, variously, the dates of the respective announcements, the effective date for contract sales, or some dates between those dates. (37) In early September, 1956, Dow announced a $4.00 per ton Eastern list price increase on anhydrous caustic soda, raising its list prices for solid caustic soda to $86.00 per ton, 700 pound drums, carload lots, F.O.B. plant and flake caustic soda to $94.00 per ton, 400 pound drums, carload lots, F.O.B. plant, to be effective for contract sales on October 1, 1956, and effective for spot sales immediately. Within approximately fourteen days after this announcement all of the merchant producers who were selling dry caustic soda in either form had increased their respective Eastern list prices by the same amount as Dow, effective for contract sales on October 1, 1956, and effective for spot sales on, váriously, the dates of the respective announcements, the effective date for contract sales, or some date between those dates. (38) In early September, 1956, Allied announced an Eastern list price increase of $2.00 per ton on soda ash, raising its list price for carload lots, railroad bulk hopper cars to $31.00 per ton, F.O.B. plant, for light ash and to $32.00 per ton, F.O.B. plant, for dense ash, to be effective for contract sales October 1, 1956, and effective for spot sales immediately. On the same date and with the same effective dates for contract and spot sales, Allied also announced an increase in Eastern list price to $1.85 per 100 pound paper bag, F.O.B. plant, for light ash and $1.90 per 100 pound paper bag, F.O.B. plant, for dense ash. Within approximately fourteen days after this announcement all of the merchant producers who were selling soda ash in these grades and lots had increased their respective Eastern list prices by the same amounts as Allied, effective for contract sales on October 1, 1956, and effective for spot sales on, variously, the dates of the respective announcements, the effective date for contract sales, or some date between those dates. (39) No direct evidence was offered at trial of an agreement or arrangement among the chlor-alkali producers to make price increase announcements by prearrangement, i. e., to “establish their prices on chlor-alkali products jointly, concurrently and in unison” (Complaint, If 23(a)). Plaintiff seeks to have such alleged facts found by inference from the testimony of its key witness, Alfred F. Smith, former sales manager for the Chlor-Alkali Division of FMC. Smith testified that during the approximately four years of his tenure as sales manager he discussed prices, “collectively or individually” with officers and executives of other chlor-alkali producers, whose names were suggested to him by counsel for the plaintiff, and that, although he was unable to recall anything about these discussions, or have any specific recollection of any of these discussions, and had no particular recollection of the several price increases which occurred during this four years as sales manager, no price increase announcement that did occur ever came as a surprise to him; the source of his information “could” have been discussions and meetings, and “probably” was obtained through conversations with competitors. (40) Viewed in the context of his testimony considered as a whole, the vague assertions by Arthur Smith, that no price increases occurred in the industry while he was sales manager which he did not have prior knowledge of, and that he could have learned of these increases through meetings or discussions witn competitors, are an insufficient basis upon which to predicate the existence of an understanding or agreement to fix prices; particularly in view of Smith’s equivocal testimony that he did not recall how he obtained this prior knowledge, and could recall neither specific meetings at which prices were discussed, nor even the substance of any meetings he attended related to pricing of chlor-alkali products. (41) Of the twenty or so officials of the other chlor-alkali producers with whom Smith testified that he discussed prices, “individually or collectively”, twelve were called as witnesses by either the plaintiff or the defendant. Several testified that they did not know Smith, or knew him slightly; but all testified explicitly that they had no discussions with Smith, nor were they present with him at any meetings which involved agreeing upon, arranging or concurring in any price increase announcements in 1955 or 1956. To the extent that there is a conflict in testimonial recollection between these witnesses and Smith, the Court finds the testimony of the former to be more credible. (42) There is no credible evidence in this case of any meetings or communications, oral or written, between representatives of FMC and its alleged co-conspirators leading up to the chlor-alkali price increases of 1955 and 1956; or evidence of any agreement or concert of action between the parties to eliminate price competition during those years. (43) There is credible evidence in this case explaining both the phenomenon of uniform list prices and contemporaneous price movements by competing producers, and the means by which competing producers could learn of anticipated price actions by competitors prior to their official announcement, absent consultation among competitors. (a) Uniformity of published list prices without more is not evidence of collusion among competitors. The evidence demonstrates that in a commodity market in which the products are basically homogeneous or fungible (i. e., each is identical with its counterpart in a particular category or grade), as is the case in the chlor-alkali industry (Finding 12), list prices are usually identical within a given freight zone. List price uniformity is even more likely where the principal market for these homogeneous products is as raw or intermediate materials in the. production of other products (Finding 14) sold to large industrial users (Finding 15), having two or more suppliers of the same product (Finding 16), under long term contracts containing “price protection” and “price notification” clauses (Finding 15) and represented in sales transactions by skilled and informed purchasing agents (Finding 16); because under these conditions demand is inelastic, no producer can successfully sell at a higher price than its competitors, and if it attempts to sell at a lower price, unless the buyer is sworn to secrecy, under the price notification and protection clauses of the supply contracts the discounting seller’s competitors will be given the opportunity to meet its lower prices, resulting in uniform prices again, but at a lower level, and without any increase in the seller’s net share of the market. (b) As a matter of good customer relations, chlor-alkali producers generally notify important customers of planned price changes by direct announcement prior to officially releasing the information to the news media. Since some chlor-alkali producers, in certain situations, were large suppliers to competing producers, as customers these competitors also received prior notice. (44) In 1955, FMC was a major soda ash customer of Allied Chemical Company, purchasing nearly $1,000,000 worth per annum for use at FMC’s Cartaret, New Jersey phosphate plant. As a major customer, FMC was notified by Carleton Bates, President of the Solvay Division of Allied, of Allied’s planned 1955 price increase by direct announcement, prior to the official announcement. (45) There is insufficient credible evidence in this case from which the Court can find or infer that the 1955 and 1956 increases in the prices of chlorine, liquid and dry caustic soda and soda ash were the result of any understanding or agreement between FMC and its alleged co-conspirators. E. THE 1958 DRY CAUSTIC SODA PRICE INCREASE. (46) On March 11, 1958, FMC announced an Eastern list price increase of $10.00 per ton on anhydrous caustic soda, raising the list prices of solid caustic soda to $96.00 per ton, 700 pound drums, carload lots, F.O.B. plant, and of flake caustic soda to $104.00 per ton, 400 pound drums, carload lots, F.O.B. plant, to be effective for contract sales on April 1, 1958, and effective for spot sales immediately. Within approximately four days each other merchant producer who was at that time selling and offering for sale anhydrous caustic soda increased its respective Eastern list prices, for those forms and packaging which it was selling by the same amount as FMC, effective for contract sales on April 1, 1958, and effective for spot sales on, variously, the dates of the respective announcements, the effective date for contract sales, or some date between those dates. (47) The list price of dry caustic soda has traditionally been higher than that of liquid caustic soda reflecting the added expense of the further processing steps required for converting the liquid to solid as referred to in Finding 10, supra. This price differential had become inadequate, however, to return a profit to offset the increased costs of further processing. (48) At the time of the price increase, FMC was a relatively small producer of dry caustic soda. It continued to produce dry caustic soda purely as a service to customers of liquid caustic, at costs substantially exceeding sales revenue, until eventually closing down its dry caustic soda plant entirely in the early 1960’s. (49) Arthur Smith of FMC was a strong proponent of the view that the price differential between liquid and dry caustic soda should be increased to more accurately reflect the added cost of producing the latter. He expressed this opinion both to his superiors ip FMC and to sales executives of competing producers. From at least 1956 until the time of the dry caustic increase announced by FMC in March, 1958, Smith sought a $10 per ton increase in the price of dry caustic soda by FMC; and, because of his view that the chances of a price increase “sticking” were not good unless all major producers joined in such an increase, sought the concurrence of competing producers in making such a price increase. (50) Arthur Smith had information, in the form of a report, prepared for him by the FMC chlor-alkali production department documenting the additional costs involved in making dry caustic soda from the liquid caustic. The report was prepared to provide Smith with a factual basis for his position that a price increase on this product was needed. It was Smith’s idea that the increase be $10 per ton. (51) In 1956, Arthur Smith attended a luncheon at the University Club in New York City. The luncheon was hosted by John Coey, Eastern Sales Manager of Hooker Chemical Co. Present also were a number of executives of other companies which produced and sold flaked dry caustic soda. Coey’s purpose in bringing these persons together was to explore the possibility of standardizing the size of openings in the heads of drums in which flaked dry caustic soda was shipped. A proliferation of sizes of drum heads preferred by various producers and customers created inventory problems for both, as producers had customers requiring different size containers, the customers, who sometimes used the same drums to repackage and ship their own products, in turn each had several suppliers of dry caustic. In addition, Coey felt that the different sized heads gave customers something to use as a wedge between different producers and made it difficult for them to compete on an “even” basis. (52) Discussion during the luncheon referred to in Finding 51 revealed no concensus among producers as to a satisfactory drum head opening to serve as a standard, the various producers having various preferences depending upon the drum-forming machinery in which they invested, or on their inventory. (53) At the end of the discussion at the luncheon, Smith of FMC sought to turn the discussion to dry caustic soda pricing, saying that he thought there should be an increase of $10 in the differential charge between liquid caustic soda and dry caustic soda; but Coey asserted that he was not authorized to discuss prices and immediately adjourned the meeting so that there was no further general discussion. After the adjournment of the meeting Smith continued to discuss the $10 a ton increase with others at the meeting. (54) Within a month prior to announcing the dry caustic price increase on March 12, 1958, Smith discussed the proposed $10 a ton increase with, and received the required approval of, his immediate superior, Fred Gilbert, the then General Manager of the ChlorAlkali Division. Smith informed Gilbert that he felt sure that the price increase attempt would succeed. (55) Shortly before FMC announced the 1958 dry caustic soda price increase, Arthur Smith of FMC called John Coey of Hooker and Arthur Phillips, then Director of Sales for the Solvay Division of Allied Chemical Company. Smith informed each of these men that FMC was increasing its price for dry caustic soda $10 a ton, asked their reactions, and inquired whether their respective companies would support the price increase. Coey told Smith that he would believe Smith’s statement when he saw it announced in the papers, but did not indicate to him that Hooker would go along with the increase. Phillips informed Smith that he was under definite company instructions not to discuss prices with competitors, and thus would not comment on Smith’s statement. The next day Phillips informed his immediate superior, Lester Gordon, Vice-President of the Solvay Division of Smith’s telephone call. Mr. Gordon in turn informed his superior, either the senior vice-president of the Solvay Division, H. F. Merritt, or the Division President, I. H. Munro. (56) On the evidence, considered as a whole, the Court concludes that for an indefinite period of time preceding FMC’s March 12, 1958 announcement of a $10 a ton increase in the price of dry caustic soda, Arthur F. Smith, sales manager of FMC’s Chlor-Alkali Division sought an agreement on the part of FMC’s competitors to support such a price increase, that he sought to discuss the cost-price squeeze in the marketing of dry caustic soda whenever the occasion presented itself, but further finds that he obtained no such agreement or assurances. At most the evidence supports a finding that he “thought” that other producers would follow FMC’s lead, this was based on “conviction or hope”; but in his words, “I don’t recall anyone ever saying that they would support me.” F. THE “PROCTOR AND GAMBLE INCIDENT”, 1957-58. (58) In the summer of 1957, Proctor and Gamble (P&G) purchasing agents, Braun and Heller, began systematic solicitations of P&G’s multiple caustic soda suppliers to obtain supplies of caustic soda at lower cost. They informed each supplier that P&G had developed technology for using soda ash in its manufacturing process and, despite the capital cost of converting the facilities to use soda ash, would realize substantial savings by making the conversion if the price differential between caustic soda and soda ash continued to be the same. They indicated that a substantial reduction in the cost to P&G of caustic soda would be necessary to deter P&G from making the conversion. (59) The P&G agents made their approach to FMC with regard to the cost of P&G’s caustic soda supply in August 1957, in a meeting with Farley (general manager of FMC’e chlor-alkali division), Smith (sales manager under Farley), Preston Tinsley (assistant sales manager) and Richards (a “production manager”). FMC was selling small quantities of caustic soda to P&G at this time but was interested in increasing its caustic soda position with P&G. Further, FMC could not have economically shipped soda ash from FMC’s Wyoming plant to P&G’s principal consuming location at Cincinnati, Ohio because freight costs would have been prohibitive. The FMC representatives responded favorably to the P&G agents and suggested that P&G consider a proposal by FMC to supply twenty-five thousand tons per annum of P&G’s requirements at Cincinnati at a 10% discount from the prevalent list price. The P&G agents said that they would entertain such a proposal. Tinsley reported to Dr. Carl Prutton, then vice-president in charge of FMC’s chemical divisions, about the possibility of obtaining additional P&G tonnage by granting a discount and was encouraged by Prutton to pursue the matter and study it. Thereafter however Smith alone handled almost all further discussions with the P&G agents and Prutton, who received no further report about developments until the spring of 1958 assumed that the opportunity had misfired or been dropped. (60) In a conversation with P&G purchasing agent Braun on September 5, 1957, Smith assured him that: (a) FMC would be willing to supply 30,000 tons of caustic soda at a 10% discount; (b) If P&G were unsuccessful in obtaining a discount from other producers, FMC could handle an additional 30,000 tons of caustic soda per year; (c) If the industry generally would not grant the discount, FMC would still grant it; (d) If the discount became general, FMC would still sell caustic soda to P&G at 10% less than the going market price; and (d) This proposal by Smith had the approval of FMC’s management, with agreement on a contract term of five years. Smith repeated these assurances to Braun’s superior, Haller, on September 7, 1957. On September 12th, Smith told Haller of P&G that FMC was going to the industry to see if it could get agreement that P&G was entitled to a price concession, but if this was unsuccessful FMC would still itself grant the discount. At no time did Smith inform any of his superiors that he had given these assurances to P&G. (61) Executives of various caustic soda producers attended a gathering held on October 24, 1957, at the Engineers Club in New York, hosted by Arthur Smith, and which at noon moved to the Yale Club of New York City. A second gathering, hosted by George Lawson, Sales Manager of Pennsalt, was held at the Yale Club on November 25, 1957. Present at these meetings were executives with pricing and sales responsibilities from FMC, Hooker, Olin Mathieson, Pennsalt, Dow, Allied and Wyandotte, among others. In addition, Fred Gilbert, then general manager of the ehloralkali division of FMC was present at the luncheon portion of the November 24 meeting at the Yale Club. (62) The subjects of discussion at the meetings were the approaches Proctor and Gamble had made to its caustic soda suppliers, the technical and economic feasibility of its threatened conversion from caustic soda to soda ash, and the impact which granting P&G’s request for a discount might have on the entire caustic soda market. Smith, of FMC, without revealing thé assurances he had given P&G on September 5 and 7, 1957, made clear his opinion that P& G’s conversion plan was reasonable and feasible and that P&G was therefore entitled to a discount. Sherrod Scott, Director of Sales for Wyandotte, felt that granting the discount to P&G would influence the general level of caustic soda prices and bring them downward. Others present expressed the opinion that there was not enough information available to make a proper decision on whether or not to grant a discount to P&G and that more technical information should be developed. This was the opinion that prevailed. Thus the meetings ended without agreement on what anyone would do. But some of those present left with the distinct impression that at least for the time being there would be no discount offered to P&G. (63) On November 14, 1957, between the dates of the two gatherings referred to in Findings 61 and 62, supra, Smith reported to P&G purchasing agent Braun that other caustic soda producers were not supporting the view that P&G should get a discount, and that FMC would go it alone in giving P&G the discount and expected to be able to sign a contract in a few months. (64) In December, 1957, Mr. Ernest Hart, then president of FMC, accompanied by Gilbert and Williams, then FMC vice-president, visited the P&G offices in Cincinnati. They discussed the P&G situation with Haller, the P&G purchasing agent who later reported to his superiors that FMC still expected to be able to go ahead and grant a discount “as planned”. At this time, Smith’s superiors in the FMC organization were unaware of the assurances and commitments already given to P&G by Smith. (65) On December 26, 1957, Smith advised Haller of P&G that he was still optimistic about the chances for a deal. (66) In anticipation of receiving a discount from FMC, P&G in the first two months of 1958 began substantially increasing its spot purchases of caustic from FMC for its Cincinnati plant, effectively displacing Columbia-Southern as a supplier at that location. (67) In April of 1958, because of FMC’s perceived vacillation on the question of granting a discount, Braun and another P&G purchasing agent called on FMC in New York and were told by Gilbert that FMC had not decided whether it would give P&G any discount. This statement by Gilbert was the first indication to P&G that FMC management did not fully support the proposals previously made by Smith. The P&G officials expressed the view that dealing with a bona fide representative of a company should be the same as dealing with the company itself, and criticized FMC’s apparent undue concern over possible reaction by its competitors to a discount. (68) In April, 1958, following the visit by P&G’s purchasing agents, Donald C. Oskin, then a vice-president of FMC’s Chemicals Division, and newly appointed Assistant General Manager of FMC’s Inorganic Chemicals Department in charge of its Chemicals Division, was asked by Dr. Prutton, FMC’s Executive Vice-President, to study the P&G matter and to try to resolve the P&G problem which was a subject of great concern to the FMC organization. Relations with P&G, FMC’s largest account ($21 million in all chemicals, with $18 million in phosphates alone) were being jeopardized by FMC’s nonaction on the subject of a discount on liquid caustic soda. Oskin who prior to his appointment in April, 1958, was not directly involved in the earlier handling of the P&G matter, was of a view that a discount should have been extended to P&G, and he was critical of FMC’s vacillation on this matter. However, Oskin was initially overruled by his superiors and FMC continued to withhold decision on a discount to P&G. (69) In April, 1958, Donald Oskin asked Ray Tower, Sales Manager of the Mineral Products Division of FMC to meet with P&G purchasing officials on a visit to P&G’s Cincinnati offices to ascertain from them their understanding of the negotiations between FMC and P&G relating to a caustic soda discount or price reduction. Tower met Braun, one of the P&G purchasing agents, and on the basis of this meeting wrote a memorandum to Oskin detailing the chronology of events from P&G’s initial approach to FMC up to that point, emphasizing the eroding good will of P&G toward FMC as a result of FMC’s seeming vacillation on the question of a discount, and informing Oskin that P&G was determined to obtain a price reduction from the industry on its caustic soda purchases, in which FMC would not share unless it was the originator of such reduction. This memorandum and the later memoranda prepared by Robert DeLargey, newly appointed General Manager of the Chlor-Alkali Division and J. H. Harris, newly appointed Sales Manager of the Chlor-Alkali Division were influential in ultimately persuading FMC executives to propose a discount to P&G. (70) On May 6, 1957, DeLargey and Harris presented a detailed memorandum to Gilbert, which thoroughly analyzed the P&G caustic situation, setting forth its pros and cons, in terms of probable or possible economic gains or losses accruing to FMC in acting or failing to act on P&G’s request for a discount. The factors which were evaluated were roughly characterized as: “1 P&G’s present and future attitude toward FMC depending on our actions. “2 The alkali industry’s actions and our own customers’ actions, depending on how we justify or rationalize our actions.” (71) The authors’ evaluation of the pros and cons led them to conclude that FMC had to find a way to make a package caustic soda deal with P&G, and that they had “only to figure out the best way to frame it and the most convincing explanation to the industry as to why it [was] essential to use”, in order to prevent retaliatory action by the industry in the form of a broader caustic price reduction. The factors posited by the authors as most important in determining the best way to make a price concession to P&G were: (1) its legality under Robinson-Patman regulations, and (2) the extent to which FMC and the alkali industry would feel inclined or obligated to extend a similar price concession to other classes of customers. With these factors in mind the discount plan proposed was a discount of 10% off market price to all large users in the soap and detergent industry, including producers of detergent alkalyte. The authors concluded that the impact of the discount on the caustic industry could be minimized by: “(1) Explaining the very large stake we [FMC] have at P&G. “(2) Pointing to‘breakovers [price discounts and special deals] that have already occurred recently at P&G locations. “(3) Emphasizing that the nature of the P&G deal is sufficiently narrow in its definition and application that it need not trigger a general caustic price break. “(4) Delaying our grabbing of caustic and other chemical tonnage— beyond the 30,000 T/yr NaOH at Cincinnati, which we have already enjoyed through April, ’58 — till 1959.” (72) On May 12, 1958, Hart, Prut-ton and Oskin of FMC called on Haller and Braun in Cincinnati and made a discount offer on liquid caustic soda barge shipments, and other chemicals, to P&G at Cincinnati and elsewhere, on terms similar to those suggested in the May 6 DeLargey-Harris memorandum. FMC shortly thereafter received a proposed contract from P&G dated May 27, 1958, which contained slightly different terms, calling for additional tonnage to be shipped to P&G plants at St. Louis and Chicago. Hart, the President of FMC, felt that taking extra tonnage at the additional locations posed a greater risk of general price deterioration and retaliatory actions by other alkali producers so FMC struck out the additional terms in the contract; but rather than signing and returning the revised contract to P&G, Oskin made an appointment with P&G officials for June 4, 1958, to further explain FMC’s position with regard to shipping tonnage to other locations, and in order to explain to its competitors its justification for the price discount and its precise terms. If, however, FMC had signed the proposed contract of May 29, 1958, it would have had the P&G caustic soda business. (73) Before finally consummating its deal with P&G, Oskin and Gilbert, with the approval of Prutton, Executive Vice-President of FMC, travelled to Pittsburgh, Pa., on June 2, 1958, to a gathering of executives of competing producers at the Roosevelt Hotel, to inform them of the discount which FMC was offering to P&G. Among those present were representatives of all of the major ehloralkali producers named as co-conspirators in this case: Olin, Dow, Columbia-Southern, Diamond, Hooker, Allied, Penn-salt and Wyandotte. No satisfactory or persuasive explanation of the purpose for the meeting was offered at trial by any of those in attendance. According to Oskin, he considered the meeting to be an occasion to allow he and Gilbert to explain FMC’s discount proposal to its competitors. The court finds that that was the purpose for the gathering. (74) FMC’s reason for telling the other producers of the discount given to P&G was to provide those present with precise information as to exactly what FMC had done, so that if the other producers decided’ to respond to FMC’s competitive move they would be reacting on the basis of current information, rather than by speculation or possible misinformation given by buyer’s purchasing agents. In this way the officials at FMC hoped to avoid a general break on the price of caustic soda caused by producers going beyond the narrow discount proposed by FMC. This was in line with the suggestion for easing industry reaction to the discount made in the De-Largey-Harris memo of May 6th. (75) When Oskin arrived at the P&G offices in Cincinnati on June 4, 1958, to close the caustic deal he was told by the P&G purchasing agents that P&G was going to have to give the matter further consideration. (76) Columbia-Southern, which originally supplied caustic soda to P&G at its Cincinnati plant was displaced as a supplier at the beginning of 1958 when P&G, in the expectation that FMC was about to grant it a discount, gave all of its caustic business at Cincinnati to FMC. In early March of 1958, Columbia-Southern representatives called on P&G purchasing agents to find out why Columbia-Southern had received no order for the first two months of the year and were told only that others were doing more for P&G. Thereafter, Columbia-Southern caused a local representative to keep watch on the P&G track and P&G docks at Cincinnati, and as a result of this surveillance discovered that FMC had taken the business. On May 4, 1958, Columbia-Southern made P&G an offer of a five percent (5%) discount on liquid caustic soda barge shipments to Cincinnati. The P&G purchasing agents told the Columbia-Southern representatives that P&G already had two contracts and one proposal at a better price and that they were therefore turning down Columbia-Southern’s offer. (77) While FMC was' waiting for P&G’s decision, Columbia-Southern on June 18, 1958, offered P&G a ten percent (10%) discount on the Cincinnati caustic soda business, which P&G accepted a few days later. This offer by Columbia-Southern, substantially similar to that proposed by FMC, was made with knowledge of the nature and extent of FMC’s prior proposal, as evidenced by Columbia-Southern’s representation at the June 2, 1958 meeting referred to in Finding 73, supra, in the person of Chris Bingham, a vice-president. On June 20, 1958, P&G informed FMC that FMC’s offer was being turned down because a competitor had made a more acceptable offer. (78) After P&G awarded most of its tonnage at Cincinnati to Columbia-Southern, there was still some tonnage open at Cincinnati, and at other P&G plants at St. Louis and Chicago. On February 4, 1959, FMC received the remaining 25% (8,400 tons annually) of P&G’s Cincinnati caustic soda requirements at the discounted price. (79) On the facts as found by the Court there is sufficient credible evidence to support a finding that FMC and its major competitors met on October 24, 1957, November 14, 1957, and June 2, 1958, for the purposes of exploring all facets of P&G’s conversion threat and request for a discount and exchanging all relevant information, so as to enable them to act in concert to stabilize the market for caustic soda by preventing any price erosion or break in the market which might be caused by the uncoordinated responses of chlor-alkali producers to P&G’s request for a discount. G. ADDITIONAL FINDING BASED UPON THE EXCLUDED GRAND JURY TESTIMONY OF ARTHUR SMITH. Considering the portions of Arthur Smith’s testimony before the federal grand jury in 1962 and 1963, as though, contrary to the ruling of this Court, the testimony had been admitted as substantive evidence in this case, I find that while to a certain extent Smith’s testimony before that body gave a more complete explanation of the means by which he was assertedly aware of all chloralkali price increases before they were publicly announced; his understanding of the nature of the price-fixing agreements entered into by the erstwhile competitors ; his efforts to obtain agreement on a dry caustic price increase, and a caustic soda price discount for Proctor and Gamble; the difference is relative only. The testimony was characterized by much of the same vagueness as at trial with respect to specific events or occasions said to evidence the existence of a concert or conspiracy; and, in the absence of other evidence, is clearly insufficient to support a finding of the existence of a collusive agreement to fix prices. In addition, severe doubts were raised in the mind of the court as to the witness’ reliability and credibility; thus it would be somewhat anomalous to accord more weight to testimony which the court had no opportunity to observe and was not subject to cross-examination than to testimony presented by the witness at trial to which the Court gives little weight. To the extent that Smith’s testimony before the grand jury is consistent with other evidence, its weight as corroborating evidence is not necessary to support the Court’s findings. H. THE OUTING AT THE OLD CLUB, HARSEN’S ISLAND, MICHIGAN, JULY 8-9, 1958. (80) On or about June 16, 1958, a Wyandotte study was prepared showing that certain major elements of costs had increased to the point where they now more than offset the increased revenue gained by Wyandotte from the price increases on chlorine, liquid and dry caustic soda and soda ash in 1956, and from the $10 per ton increase on dry caustic soda earlier in 1958. Bert Cremers a Wyandotte vice-president, wrote in longhand across the top of this document “take to Old