Full opinion text
PHILLIPS, Circuit Judge. Utah Pie Company brought this action against Continental Baking Company, Carnation Company, and Pet Milk Company under Title 15 U.S.C. (1958 Ed.) §§ 15 and 26. The complaint charged that Continental, Carnation and Pet entered into a combination and conspiracy to restrain interstate commerce and monopolize such commerce in violation of §§ 1 and 2 of the Sherman Act (15 U.S.C.A. §§ 1 and 2), to be effected by destroying the competition of Utah Pie through the weakening of its capital structure and the destruction of its profits, and to violate § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act (15 U.S.C.A. § 13(a)), by price discriminations in the State of Utah, effected by selling their frozen pies at prices “below cost” in the State of Utah and at lower prices in such state than they charged for their frozen pies “in other western states.” The case came on for trial in February, 1963. At the close of the evidence, each defendant properly moved for a directed verdict in its favor on the § 2(a) claims asserted by Utah Pie. Each motion was denied. The jury returned a verdict in favor of the defendants on the conspiracy claim and a verdict against each defendant on Utah Pie’s § 2(a) claims. Each defendant, in accordance with Rule 50(b) of the Federal Rules of Civil Procedure, made a timely and proper motion to set aside the verdict against it and enter judgment n. o. v. in its favor on Utah Pie’s § 2(a) claims. Each motion was denied. The jury also returned a verdict in favor of Continental on a counterclaim asserted by it, charging a § 2(a) violation by Utah Pie. On Utah Pie’s n. o. v. motion, the court set aside that verdict and entered judgment on the counterclaim in favor of Utah Pie, notwithstanding it had not moved for a directed verdict in its favor on the counterclaim. On February 23, 1963, a judgment was entered for Utah Pie against each defendant for treble the amount of the verdict against it, and permanently enjoining each of the defendants from violating § 2(a). Appeals from each of such judgments have been taken. The injunction portion of the judgment was stayed by this court, by order entered March 21, 1963. The § 2(a) claims and the conspiracy claim were tried at the same time and the evidence in support of them was commingled. Certain facts, if set out and considered in isolation, would present a distorted picture of these cases. To get a true perspective of them, the whole factual picture and the relation of each of the facts to each other must be brought into proper focus and considered together. In each appeal, except Continental’s appeal from the judgment in favor of Utah Pie on Continental’s counterclaim, there is set up as a ground for reversal that the evidence was insufficient to support the verdict in favor of Utah Pie, or warrant the injunction. Since we conclude the judgments in favor of Utah Pie must be reversed on that ground, we shall not consider the other grounds urged for reversal. Many of the facts relating to the § 2(a) claims are pertinent in all of the appeals, and we will undertake to set out a portion of such facts in a general statement of facts. We will then set out separately the facts particularly applicable in each of the respective appeals. I General Statement of Facts The evidence in these cases covers the period 1958 to 1961, both inclusive. It is free from substantial dispute, except for a few statements of opinions or conclusions not based on any substantial underlying proof. The offering prices, selling prices, sales volumes, percentages of market shares, earnings, and other like matters; the tables and charts which appear in this opinion; and the appendices annexed hereto are all based on uncontroverted documentary evidence, some of which was introduced by the plaintiff and some by the defendants. The phrase “frozen fruit pies” is sometimes used in the frozen pie industry in a broad sense and as including frozen apple, cherry, boysenberry, peach, pumpkin and mince pies, although the latter two are not, strictly speaking, fruit pies. In its broad sense, the phrase does not enbrace frozen cream pies, such as lemon cream, chocolate cream, cocoanut cream, and the like. The frozen pies involved in these appeals are those embraced in the phrase “frozen fruit pies” in its broad sense. We will hereafter refer to them simply as “frozen pies.” The phrase “frozen fruit pies” is also used in a more narrow sense, as embracing only the strictly fruit pies, and not including mince, pumpkin, or the cream pies. Frozen fruit pies in that narrow sense will be referred to hereinafter as “frozen fruit pies.” Utah Pie, a Utah corporation, owned and operated by the Rigby family, was in the fresh pie business for nearly 30 years prior to 1957. It marketed its fresh pies in Salt Lake City and other points in Utah, in Las Vegas, Nevada, Grand Junction, Colorado, Farmington, New Mexico, Evanston, Wyoming, and at one other city in Nevada. Faced with a declining volume and a substantial loss in its fiscal year ended October 31, 1957, Utah Pie, in the latter part of that year, entered into the frozen pie business. It had much of the facilities needed for the frozen pie business in its old plant. It opened a new plant in 1958, which had a capacity, at least by 1961, on a three-shift basis, of 40,000 frozen pies a day, or about one and one-half million cases of frozen pies per year. There are six pies in a case. It had adequate refrigeration for fruit, production facilities, and storage of frozen pies. Its frozen pie business was well managed and its sales and transportation costs were low. It had the only frozen pie plant located in the Salt Lake City market, which enabled it to deliver to its customers frozen pies in small quantities. The frozen pie business is comparatively new and highly competitive. The six western states of California, Washington, Oregon, Utah, Arizona and Colorado embrace a portion of the Inter-Rocky Mountain and West Coast regions. In each of such states there are one or more separate and distinct frozen pie market areas, which comprise a large metropolitan center and the territory closely adjacent thereto. There are distinct frozen pie market areas in Los Angeles, San Francisco, Seattle, Portland, Spokane, Salt Lake City, Phoenix and Denver. The periphery of each of such market areas is nearly the same as that of the area in which its metropolitan newspapers circulate, that, because retail advertising is the lifeblood of the frozen pie industry and crucial to volume sales. The current retail price in a particular market area at a particular time is generally fixed by the prices at which the chain stores and cooperative grocery organizations advertise their frozen pies in the Thursday and Friday editions of the local newspapers, published and circulated in that market area. During the period 1958 to 1961, inclusive, retailers of frozen pies in the Salt Lake City market advertised Utah Pie’s brands a great many more times than they did brands of each of the other manufacturers selling in that market. The manufacturers and distributors of national brands, who sell throughout the United States, the manufacturers and distributors of regional brands, who sell in several of such local market areas, and sometimes a local manufacturer and distributor, whose single plant is located in a particular market area where his principal business is done, but who also may sell in other market areas in the same region, usually make up the group competing in a local market area. More than 30 different brands are sold in the six western states referred to above, and the number of nation-wide manufacturers of frozen pies is over 200. The brands, or labels, used by the parties to these appeals were as follows: Utah Pie “Utah,” “Frost ‘N’ Flame,” “Mayfresh,” and “Sonny Boy”; Carnation “Simple Simon”; Continental “Morton’s”; Pet “Pet-Ritz” and “Swiss Miss.” Utah Pie and Pet also manufactured frozen pies for Safeway Stores, Inc., under the latter’s label, “Bel-air.” The price in a particular market area depends on the number and identity of the competing manufacturers, the competitive factors in such market, and the extent of the thrust or pressure of such factors at a particular time. A local manufacturer and seller, with his plant located in a particular market area, because of his low distribution and selling costs, preferences normally given to a local business, and his ability to sell and distribute frozen pies in either large or small quantities, is in a position to assert a very substantial competitive thrust and pressure, not present where there is no local manufacturer and seller competing in the area. Another competitive factor, which affects some local market area prices is the presence of private or controlled brands of frozen pies, which are usually sold by large retail chains and members of cooperative grocery organizations, and are purchased by them in large quantities at preferential prices. A controlled label is owned by the manufacturer, but sold to only one buyer in a particular market. A private brand is owned by the buyer and may be manufactured by one or more suppliers. Because the competitive thrusts and pressures in a particular market area differ substantially from those at a given time in other market areas and change from time to time in the several market areas, the prices in each market area change from time to time independently of price changes in other market areas. Hence, the prices in the several market areas in such Intermountain and West Coast regions have little, if any, relation to each other and are not uniform. They vary from time to time and from market area to market area. The Salt Lake City market area comprises most of the State of Utah, southern Idaho, and small areas adjacent to Utah in the States of Wyoming, Colorado and Nevada. That market developed its own competitive pattern. No brand seemed to enjoy a consumer’s loyalty, with the possible exception of Utah Pie’s Utah brand. Pies were purchased primarily on a price basis. The prevailing retail price was fixed by the advertised week end specials appearing in the local newspaper advertisements of the grocers on Thursday and Friday. In the first part of 1958, Utah Pie marketed its frozen pies in Utah and Idaho. It gradually extended its sales to other areas, so that by 1961 it was selling frozen pies in Utah, Idaho, Washington, Colorado and Wyoming. However, its sales outside of Utah and southern Idaho during the period involved in this law suit, 1958 to 1961, were negligible. See Appendix I attached hereto. Utah Pie entered the field, as stated above, late in 1957, at least two years after Carnation, Continental and other manufacturers had introduced frozen fruit pies in the Salt Lake City market. Throughout the period here involved, Utah Pie’s competitive emphasis was on price and except for a comparatively few instances, hereinafter noted, it sold its frozen pies at prices below those of its competitors. In 1958, Utah Pie sold 75,939 cases of frozen pies; in 1959, 76,744 cases; in 1960, 167,788 cases; and in 1961, 205,380 cases. During those four years its volume increased 270.5 per cent and its dollar volume in sales of frozen pies increased from $139,306.24 in the fiscal year ended October 31, 1958, to $407,-841.25 in the fiscal year ended October 31, 1961, an increase of 292.8 per cent. Salaries paid the Rigby family engaged in the business increased by approximately $30,000 during those four years and net income before' taxes, as adjusted, went from a loss of $1,264.51 in fiscal 1958 to a profit in fiscal 1961, before taxes, of $30,597.10. After taxes, it was $19,643.04, which was 28.5 percent of its net worth. In 1958, Utah Pie captured 66.5 per cent of the market. In 1959, while its volume increased, its share of the rapidly expanding market decreased to 34.3 per cent. In 1960, its sales volume more than doubled and its market share went up to 45.5 per cent. In 1961, its sales volume very substantially increased, as shown above, and its market share held at 45.3 per cent. During the entire period involved in these cases, Utah Pie’s sales volume and dollar sales substantially increased as did its profits except in 1958, and it enjoyed a very large percentage of the total sales volume in the Salt Lake City market, which percentage stabilized at about 45 per cent the last two years of the period. Throughout such period it was continuously a financially strong business concern and a healthy and effective competitor in the Salt Lake City market. Utah Pie’s phenomenal increase in sales of frozen fruit pies, an increase of 270.5 per cent in four years, came notwithstanding its sales efforts were almost minimal. Utah had but one salesman in the nine states in which it attempted to sell frozen fruit pies during the years 1958 to 1961. This salesman made only isolated trips to cities outside Utah Pie’s immediate trading area, the Salt Lake City market. The company maintained no permanent sales force in such cities as Spokane, Seattle and Denver. It once had a broker in Portland, but apparently for only a short time. It made an effort to secure the account of Miller’s Supermarket irt Denver, but the Utah Pie salesman was told he would have to contact the chain’s office in Chicago. No contact was ever made. The amounts spent on advertising during the years 1957 to 1961, inclusive, were comparatively small, and were as follows: In fiscal 1957 1958 1959 1960 1961 432.21 3,431.71 3,180.29 7,160.63 1,226.01 As will appear from the table which follows, the demand for frozen pies in the Salt Lake City market rapidly increased during the period 1958 to 1961, inclusive. The following table is a composite picture of the total sales volume and the percentage of market shares of each party hereto and the other competitors in the Salt Lake City market in the years 1958 to 1961, inclusive. 1958 (Volume in dozens) % of Company Volume Market Carnation 5,863 10.3 Morton 754 1.3 Utah Pie 37,969.5 66.5 Pet 9,336.5 16.4 Others 3,137 5.5 Totals 57,060 100.0 1959 Carnation 9,625 8.6 Morton 3,182 2.9 Utah Pie 38,372 34.3 Pet 39,639 35.5 Others 20,911 18.7 Totals 111,729 100.0 1960 Carnation 22,371.5 12.1 Morton 3,350 1.8 Utah Pie 83,894 45.5 Pet 51,480 27.9 Others 23,473.5 12.7 Totals 184,569 100.0 1961 Carnation 20,067 8.8 Morton 18,799.5 8.3 Utah Pie 102,690 45.3 Pet 66,786 29.4 Others 18,565.5 8,2 Totals 226,908 100.0 Many frozen pie manufacturers gave rebates from their list of offering prices in the form of advertising allowances for stated periods, upon proof of advertising by the purchaser on tear sheets furnished to the purchaser for that purpose. There was no requirement as to size of advertisement, and the advertisement needed only to be run one time to qualify the purchaser for an allowance. The dollar amount of the allowance was not determined by the quantity of frozen pies purchased, nor by the size or frequency of the advertisement, and the small purchaser who advertised received the same allowance per case as the large purchaser. In effect, the advertising allowance is a discount and fixes the net per case price of the pies purchased. We now turn to separate statements of the facts particularly applicable in each appeal. However, from time to time in each of such statements, facts will appear which obviously have general application in the other two appeals, but which we think can be better stated in the context of the statement wherein they appear. II No. 7309 Factual Statement in the Pet Appeal Pet is a corporation engaged in the manufacture and sale of food products, including frozen pies. Its main office is in St. Louis, Missouri. Its frozen pie manufacturing plants are located in Frankfort, Michigan, Chambersburg, Pennsylvania, and Fresno, California. Pet sells and distributes its pies from its three plants throughout the United States. From 1958 to 1962, inclusive, it was a competitor of Utah Pie in the Salt Lake City market. Pet entered the frozen pie business in 1955, by the acquisition of a frozen pie plant at Beulah, Michigan. Initially, its pies were made in four flavors and distributed in a relatively small north central territory, the Detroit-Chicago-Milwaukee area. In order to expand its frozen pie business nationwide, Pet moved its plant from Beulah to Frankfort, and then in 1956 acquired its plant at Fresno, and in 1957 its plant at Chambersburg. It marketed its pies under the brand, Pet-Ritz. It added new flavors and undertook to accelerate consumer acceptance and demand through an extensive advertising campaign, which emphasized the quality of its pies. This advertising included advertising in local newspapers, distribution of coupons that might be used in purchasing pies, and demonstrations in grocery stores to show how easily the pies could be prepared for consumption. It also included a large expenditure for advertising on a half-hour television program, starring Red Skelton. Soon after Pet entered the frozen pie industry, the nature of the market began to change. As frozen pies became more and more in demand, numerous regional or local companies, such as Utah Pie, entered the business. Because of the freight advantage, which they had over the national companies, whose products usually had to be shipped into a region from a distance, the local and regional companies were able to sell at lower prices than the national companies had been charging. Emphasis in many regional markets shifted from quality to price, and price became the principal factor of competition. With the increase of price competition, prices of frozen pies declined. During 1957 and 1958, while prices were declining and the market was expanding, Pet’s sales of frozen pies did not keep pace with the expanding market. In the Salt Lake City market, total sales in 1959 were 1.96 times total sales in 1958, while sales of Pet-Ritz pies were 1.52 times sales in 1958; total sales in 1960 were 1.64 times total sales in 1959, while Pet-Ritz sales were 0.58 times sales in 1959; and total sales in 1961 were 1.24 times total sales in 1960, while Pet-Ritz sales were 0.46 times sales in 1960. During the period 1958 to 1961, inclusive, the total sales of Pet-Ritz pies were the following percentages of all brands of frozen fruit pies sold in the Salt Lake City market: 1958 — 16.4 per cent; 1959 — 12.7 per cent; 1960 — 4.5 percent; 1961 — 1.7 per cent. The decrease was due to the fact that other brands were being sold below the Pet-Ritz price in that market. When Pet realized that advertising efforts were not enough to check its continuing decrease in sales, it made William N. Harsha, who had been the managing director of Pet’s Canadian corporation, general manager of the Pet-Ritz Frozen Foods Division. It assigned him to different divisions of Pet to study its operations and financial and production problems. After a review and study of Pet’s operations, Harsha decided to curtail the advertising and effect economies by eliminating duplication in overhead, increasing processing efficiency, improving production methods, reducing warehousing costs, and reducing freight costs by better scheduling of deliveries. Pet also decided to make an analysis of the frozen pie market to determine what kind of pie the housewife preferred. It was then known that the housewife was price conscious, but Pet, having spent large sums in advertising the Pet-Ritz brand as a quality product, did not want to reduce the quality of that pie to enable it to compete with lower-priced pies. As part of the effort to analyze the market, a research director was employed, who began his studies in June, 1959. Soon thereafter, the Market Research Corporation of America was engaged to make a study to help Pet decide whether or not to add a smaller and lighter economy brand of frozen pies. The result of these studies indicated that there was a market for a frozen economy pie and Pet introduced its Swiss Miss pie in Denver in April, 1960, and elsewhere in the United States, including Utah, in August, 1960. Swiss Miss is an eight-inch, 20-ounce pie. Utah Pie’s brands are all eight-inch, 24-ounce pies. While it did not fully meet the price competition, it enabled Pet to compete more effectively, improved the profit picture of the frozen goods operation, and restored some of Pet’s distribution with major chains. In addition to adding the lighter-weight, lower-priced Swiss Miss to its line of fruit pies to improve its competitive position, Pet also entered into negotiations with Safeway Stores, Inc., for the production for it of frozen fruit pies under the Bel-air label. It sold Safeway 25,462.5 dozen Bel-air frozen fruit pies in 1959, and in December of that year secured a contract to supply Safeway with Bel-air frozen fruit pies during 1960. Under this contract, Safeway agreed to purchase not less than 500,000 dozen and not more than 1,000,000 dozen frozen fruit pies in 1960, and Pet agreed to manufacture and deliver such pies to Safeway. The minimum quantity was stipulated, because Pet had to buy new equipment to handle the added production, and assurance of a minimum purchase was needed to compensate for the cost of the equipment. Exhibits introduced by Utah Pie reflect cost studies made of Bel-air frozen pies sold by Pet to Safeway. They show Pet’s costs of manufacture, sale and delivery of such pies were $0.4980 less than such costs of like pies sold under its regular labels, and that the difference in price to Safeway of such Bel-air pies and the price such like pies sold to other customers was only $0.4275. The difference in cost justified the difference in price under the cost justification proviso in § 2(a) of the Clayton Act (15 U.S.C. § 13(a)). Safeway regularly followed the practice of requiring the sellers of its frozen pies to justify any reduction in price to it by a showing of cost difference. It did so with respect to the sales of Bel-air pies to it by Pet, under the December, 1959 contract, by an express provision therein so requiring. Simultaneously with such efforts to cut costs and improve volume of sales, Pet, in 1958, began to reduce its advertising expenditures for frozen pies. From $866,116 in 1959, its advertising expenditures were reduced to $337,510 in fiscal 1961, and to $42,562 in fiscal 1962. By the time the present case came on for trial, Pet’s frozen food division, the chief operation of which was the production of frozen fruit pies, was making a net profit. The Pet-Ritz pies were always sold in the Salt Lake City market at prices substantially higher than the prices at which the pies of Utah Pie, all of which were of the same weight and quality as Pet-Ritz, were sold. In August, 1960, when the first Swiss Miss apple pie was sold in the Salt Lake City market, the price thereof was $3.29 per dozen. At the same time, the larger and heavier Frost ‘N’ Flame apple pie of Utah Pie was sold at a price of $3.00 per dozen. Thereafter, during the period covered by this action, the Swiss Miss apple pie ranged in price from $3.24 to $3.38 per dozen, while the Frost ‘N’ Flame apple pie ranged in price from $2.75 to $3.10 per dozen. Except during the periods or months hereinafter noted in this paragraph, the prices at which the Swiss Miss frozen pies were sold were always higher than the prices at which the larger and heavier Frost ‘N’ Flame pie were sold in the Salt Lake City market; and even in such periods or months the prices of Swiss Miss were higher than the prices of Frost ‘N’ Flame on an ounce-for-ounce basis; and professional buyers for resale always take into consideration differences in size and weight. In the period September, 1960, through November, 1961, the price of the Swiss Miss cherry pie, if difference in weight be disregarded, was lower than the price of Frost ‘N’ Flame cherry pie. That was true of Swiss Miss peach pie in August and October, 1960, and January, February, March, June and September, 1961, and of Swiss Miss boysenberry pie from August, 1960, through December, 1961. It was never true of .Swiss Miss apple pie. Gaylen Rigby testified for Utah Pie, as follows: “ * * * with all of our advantages that we had, * * * we knew that we could not enter the market unless we could come up with a price that would interest the wholesalers in putting in our product. We knew we’d have to be a few pennies under our competition because of our locale.” (Emphasis supplied.) In January, 1958, the first date that comparative prices are shown in the record, Utah Pie’s prices, instead of being a few pennies, were from 68 cents to $1.24 per dozen lower than the price of Pet-Ritz pies, the only pies Pet was then selling in' the Salt Lake City market. In that month, in that market, Utah brand frozen apple pies were sold at a price of $4.15 per dozen; while Pet-Ritz frozen apple pies were sold at prices ranging from a low of $4.84 per dozen, to a high of $5.00 per dozen. During 1958, the Pet-Ritz frozen apple pies were sold at wholesale in that market at prices that were approximately $1.00 per dozen higher than the prices at which Utah brand apple pies were being sold by Utah Pie. During 1959, the difference ranged from 12 cents to 62 cents per dozen; during 1960, from 54 cents to $1.28 per dozen; and during 1961, from 58 cents to $1.89 per dozen. Plaintiff’s Exhibit 112 reflects the price lists and special deals offered by Pet in Wyoming, Washington, Utah, Oregon, Montana, Idaho, Colorado, southern California and northern California in 1958, 1959, 1960 and 1961. A chart annexed hereto as Appendix II analyzes month by month the lowest absolute price offered by Pet for apple pie in each of such markets. By lowest absolute price is meant the list price, less any deals offered, whether direct discounts from the invoice price or advertising allowances. Apple pie figures are used, because it is the volume leader, sells at the lowest price of the frozen pies, and is the price indicator. The chart shows the following: Pet’s absolute price for apple pie was uniform in Wyoming, Utah, Montana, Idaho and Colorado from January, 1958, through November, 1959; at no time during that period was Pet’s price in Utah lower than its price in any of the other market areas; and during such period Pet’s lowest price was always in northern California, southern California, Washington, or Oregon. In December, 1959, Pet’s Utah price was $3.80 per dozen, while its price in Wyoming, Washington, Oregon, Montana and Colorado was $4.00 per dozen, but in that same month Pet offered apple pie in northern California for $3.70 per dozen and in southern California for $3.60 per dozen. During four months in 1960, Pet charged less for apple pie in Utah than it did in some of its other market areas, but at all times during 1960, Pet’s Utah price was higher than its price in southern California and was the same or higher than its price in northern California. In January and February, 1961, Pet’s lowest offering price for apple pie was $3.70 per dozen and was made in Utah, Montana and Colorado; in March and April, 1961, Pet’s lowest offering price for apple pie was $3.56 per dozen and was made in Utah, Montana and Idaho; and from May through August, 1961, Pet’s apple pie price in Utah was the same or higher than its apple pie prices in its other market areas. Thus, in only nine of the 44 months here involved, was Pet’s price for apple pie lower in Utah than in any of its other market areas, and in only four months, January, February, March and April, 1961, was Pet’s price in Utah the lowest of any of its other market areas. Furthermore, a comparison of Utah Pie’s absolute apple pie prices, shown by its Exhibit 91, and set forth in a chart annexed hereto as Appendix III, and Pet’s lowest absolute prices, reflected in Appendix II, shows that at no time during the 44-month period of May, 1958, through December, 1961, were Pet’s Utah prices lower than Utah Pie’s prices. Pet introduced a machine tabulation of invoices of actual sales of frozen fruit pies by it to customers in seven cities in the western states, during the period from May, 1958, through December, 1961. The seven cities were selected because most of Pet’s frozen fruit pies sold in the western states are sold through wholesalers in these cities. Pet’s Exhibit A-40 has particular relevancy to Utah Pie’s allegation of territorial price differences, namely, that Pet charged lower prices for its frozen fruit pies in the Salt Lake City market than it charged in the market area in which its pies were made or in other western markets. It shows the lowest invoice prices at which Pet-Ritz frozen apple pies were sold in Salt Lake City and the six selected cities, and we reflect the pertinent part thereof in a chart annexed hereto as Appendix IV. During the period covered by the tabulation (44 months in all), the lowest price at which Pet-Ritz frozen apple pies were sold by Pet to wholesalers in Salt Lake City was lower than the lowest price at which such pies were sold by Pet to wholesalers in Los Angeles, in only three months — December, 1959, March, 1961, and April, 1961. The following table lists these prices, as well as the lowest price at which Utah Pie sold frozen apple pies under its Utah brand in Salt Lake City in the same months: Lowest Price Charged for a Dozen Frozen Apple Pies Pet-Ritz Utah Pie Los Angeles Salt Lake City Salt Lake City December, 1959 $ 3.90 $ 3.84 $ 3.60 March, 1961 4.26 4.24 3.10 April, 1961 4.26 4.08 3.50 During the same period, the lowest price at which Pet-Ritz frozen apple pies were sold by Pet to wholesalers in Salt Lake City was lower than the lowest price at which such pies were sold by Pet to wholesalers in San Francisco in only seven months — December, 1959, August, 1960, September, 1960, January, 1961, February, 1961, March, 1961, and April, 1961. The following table lists the lowest prices at which Pet-Ritz pies were sold in each of the cities during these months, and the lowest price at which Utah Pie sold its 24-ounce Utah brand frozen apple pies in Salt Lake City during those months: Lowest Price Charged for a Dozen Frozen Apple Pies Pet-Ritz Utah Pie San Francisco Salt Lake City Salt Lake City December, 1959 $ 4.00 $ 3.84 $ 3.60 August, 1960 4.40 4.28 3.50 September, 1960 4.40 4.28 3.16 January, 1961 4.40 4.28 3.43 February, 1961 4.40 4.28 3.50 March, 1961 4.40 4.24 3.10 April, 1961 4.48 4.08 3.50 The number of Pet-Ritz frozen apple pies sold in Salt Lake City at such lower prices is almost inconsequential. They were as follows: December, 1959 125.0 dozen August, I960 45.0 dozen September, 1960 52.5 dozen January, 1961 12.5 dozen February, 1961 27.5 dozen March, 1961 27.5 dozen April, 1961 25.0 dozen Total 315.0 dozen The introduction of the “economy” Swiss Miss pie by Pet to enable it to compete with lower-priced pies in various markets has been discussed earlier. One question with respect to that pie remains. Was it sold at lower prices in the Salt Lake City market than in California, where the pies were manufactured? Utah Pie introduced no evidence whatsoever to sustain any burden of proving lower prices for Swiss Miss pies in the Salt Lake City market. The Swiss Miss pie was first sold in Salt Lake City in August, 1960. The present complaint was filed in September, 1961. Exhibit A-40 also shows all the actual sales of Swiss Miss pies in such seven western cities in 1960 and 1961, and we reflect the pertinent part thereof in that respect in a chart annexed hereto as Appendix Y. During only one of the intervening 13 months was the lowest price at which the Swiss Miss apple pie was sold in Salt Lake City lower than the price at which the pie was sold in San Francisco and at no time was the price in Los An-geles higher than the lowest price in Salt Lake City. In addition, during this entire period, the price of the Frost ‘N’ Flame pie, manufactured by Utah Pie, was always lower than the price of the lighter (by four ounces) Swiss Miss pie. The following tabulation permits a comparison of the prices. Lowest Price Per Dozen--Apple Pies Swiss Miss Frost ‘N* Flame Salt Lake City Los Angeles San Francisco Salt Lake City August, I960 $ 3.29 $ 3.05 $ 3.29 $ 3.00 September 3.25 3.05 3.17 3.00 October 3.25 3.05 3.17 3.10 November _* 3.05 3.05 3.10 December — 3.05 3.29 3.10 January, 1961 3.29 3.05 — 3.10 February 3.25 3.05 — 3.10 March 3.25 3.05 — 3.10 April 3.25 3.05 — 3.10 May 3.25 3.05 3.29 3.10 June 3.25 3.05 3.21 2.75 July 3.29 3.05 3.29 2.75 August — — 3.17 2.75 *-indicates no sales were made in the month. Even when Utah Pie’s prices for Frost ‘N’ Flame were down to $2.75 per dozen in July and August, 1961, it made a profit on its sales thereof. In 1958, Utah Pie sold 37,969.5 dozen frozen pies in the Salt Lake City market, which was 66.5 per cent of the total sales volume. In 1958, Pet sold 9,336.5 dozen frozen pies in that market, which was 16.4 per cent of the total sales volume. In 1958, neither Utah Pie nor Pet sold any Bel-air pies to Safeway. In 1959, Utah Pie sold 38,372 dozen frozen pies in that market, which was 34.3 per cent of the total sales volume. In 1959, Pet sold 39,639 dozen frozen pies in that market, which was 35.5 per cent of the total sales volume. However, in 1959, in that market, Utah Pie sold no Bel-air frozen fruit pies to Safeway and Pet sold in that year 25,462.5 dozen Bel-air frozen fruit pies to Safeway. Pet’s market share, or percentage of total sales volume in that year, with frozen fruit pies sold to Safeway excluded, was 12.7 per cent. In 1960, Utah Pie sold 83,894 dozen frozen pies in that market, which was 45.5 per cent of the total sales volume. In 1960, Pet sold 51,480 dozen' frozen pies in that market, which was 27.9 per cent of the total sales volume. However, in 1960, in that market, Utah Pie sold no Bel-air frozen fruit pies to Safeway, while Pet sold 22,694 dozen Bel-air frozen fruit pies to Safeway, and Pet’s market share, or percentage of the total sales volume, with the frozen fruit pies it sold to Safeway excluded, was 15.6 per cent. In 1961, Utah Pie sold 102,690 dozen frozen pies in that market, which was 45.3 per cent of the total sales volume. In 1961, Pet sold 66,786 dozen frozen pies in that market, which was 29.4 per cent of the total sales volume. However, in 1961, in that market, Utah Pie sold no Bel-air frozen fruit pies to Safeway, while in that year Pet sold Safeway 14,-897.5 dozen frozen fruit pies, and Pet’s market share or percentage of total sales volume, with the frozen fruit pies sold by it to Safeway excluded, was 22.9 per cent. We have shown Pet’s share of the market, with Bel-air frozen fruit pies excluded, in 1959, 1960, and 1961, because it was clearly established by uncontradicted and uncontroverted evidence that' Safeway was not willing in those years to purchase frozen fruit pies from Utah Pie, for the reason that it was unable to persuade Utah Pie to install means and procedures that would insure uniform quality of Bel-air frozen fruit pies produced by Utah Pie and sold by it to Safeway. In other words, Safeway imposed as a condition to its purchase of any Bel-air frozen fruit pies from Utah Pie that such installations be made by Utah Pie. The primary reason Safeway imposed such conditions was that it was unwilling to risk damage to the fine reputation it was building up for Bel-air frozen fruit pies by the maintenance of a constant high quality of such pies, through the unwitting sale by it of Bel-air pies, the quality of which fell below such high standard of quality. Other reasons are set forth in subjoined note . It follows that Pet’s sales of Bel-air frozen fruit pies to Safeway in 1959, 1960, and 1961 took no frozen fruit pie business away from Utah Pie. If Pet had not sold the Bel-air frozen fruit pies to Safeway in those years, the latter would have purchased them from some other manufacturer than Utah Pie, who was willing to meet Safeway’s manufacturing conditions and requirements In 1958, the market share of sellers in the Salt Lake City market, other than Utah Pie’s and the defendants’, was 5.5 per cent, and in 1959 it increased to 18.7 per cent, a gain of 13.2 per cent. The aggregate of such 13.2 per cent and the 22.8 per cent of Pet’s market share attributable to Bel-air sales in 1959 more than equals the percentage of market share decrease of Utah Pie in 1959 from 1958. Moreover, Pet’s share of the market, exclusive of its sales of Bel-air pies to Safeway, was only 12.7 per cent of the total market share, in 1959, while its share in 1958 was 16.4 per cent, and that included the sales of all kinds of frozen pies. The loss Utah Pie suffered in market share in 1959 was not attributable in anywise to Pet’s competition. In 1960, Utah Pie sold 4,608.5 dozen frozen mince and 5,336.5 dozen frozen pumpkin Bel-air pies to Safeway. In 1961, Safeway requested Utah Pie to pack its Bel-air mince pies in a new carton. Utah Pie advised Safeway it would not do so, unless it was given Safeway’s frozen fruit pie business, then going to Pet. That Safeway would not do. As a result, Safeway only purchased 50 dozen frozen mince pies from Utah Pie in 1961, just enough to let Utah Pie use up the old cartons and shipping cases it had on hand, but it purchased 6,483 dozen Bel-air frozen pumpkin pies from Utah Pie in that year. This further shows that Utah Pie’s failure to sell frozen pies to Safeway was not due to competitors’ prices, but to Utah Pie’s unwillingness to meet Safeway’s requirements. Pet’s market share, exclusive of Bel-air frozen fruit pies sold to Safeway, increased in 1961 over 1960, 7.3 per cent, but uncontroverted facts show that gain did not result from a loss by Utah Pie. In 1960, Utah Pie sold 4,608.5 dozen Bel-air mince pies to Safeway. Due to its unwillingness to use the new type carton Safeway requested, it sold Safeway only 50 dozen mince pies in 1961. It is apparent that no problems with respect to new cartons existed as to pumpkin pies, because Utah Pie sold Safeway 1,-146.5 more pumpkin pies in 1961 than it did in 1960. The only reasonable inference is that had Utah Pie been willing to adopt the new carton for mince pies, it would have sold Safeway at least as many mince pies in 1961 as it did in 1960, and had it done so, its market share in 1961 would have been 46.8 per cent, instead of 45.3 per cent. In 1960, Pet’s Swiss Miss sales accounted for 11.1 per cent of the total sales in the Salt Lake City market, while its Pet-Ritz sales accounted for only 4.5 per cent thereof. In 1961, Pet’s Swiss Miss sales accounted for 21.2 per cent of the total sales in such market, while its Pet-Ritz sales accounted for only 1.7 per cent thereof. Pet’s increase in market share in 1961 was due solely to the increase in its sales of Swiss Miss pies, and that pie, on an ounce-for-ounce basis, was always sold at a higher price than Utah Pie’s Frost ‘N’ Flame pie. In only one month, May, 1961, was Swiss Miss sold at a higher price in San Francisco than in Salt Lake City. Moreover, the market share percentage of sellers in the Salt Lake City market, other than Utah Pie and the defendants, decreased 4.5 per cent and their sales volume decreased 4,902 dozen in 1961; and it is reasonable to infer that Pet’s market share increase in 1961 derived from such decreases suffered by such other sellers. But in view of the fact that Utah Pie had a substantial sales volume increase in 1961 and would have had a market share percentage increase in that year, had its sales of Bel-air frozen mince pies not substantially decreased due to its refusal to adopt a new carton, it would be unreasonable to infer that Pet’s gain resulted from any sales loss by Utah Pie. The total sales volume in dozens and the percentage of market share of Utah Pie and Pet in the Salt Lake City market, with the Bel-air sales to Pet ex-eluded, in the years 1958 to 1961, sive, were as follows: Volume of Sales Market Share Pet Utah Pie Pet Utah Pie 1958 8,336.5 37,969.5 16.4 66.5 1959 14,176.5 38,372 12.7 34.3 1969 28,786 83,894 15.6 45.5 1961 41,888.5 192,969 22.9 45.3 In 1962, Utah Pie’s volume increased to 129,658.3. Pet’s volume and its and Utah Pie’s market share percentages are not shown in the record. Even if Bel-air sales by Pet be included in its volume, Utah Pie greatly outdistanced Pet in 1960 and 1961. On June 23, 1960, Schenk, general manager of the Frozen Foods Division of Pet, went to the Utah Pie plant in Salt Lake City, represented that he was a frozen food broker from the Northwest, and asked to be permitted to go through the plant. Permission was granted and later Schenk prepared a report showing defects in Utah Pie’s equipment and operations, to be used by D. T. Dittman of Pet in negotiating with Safeway for the latter’s business in competition with Utah Pie. Of course, Pet’s conduct was reprehensible and is not to be condoned. However, the information contained in Dittman’s report was never conveyed to Safeway personnel. Dittman so testified and so did Young, Safeway’s buyer. It thus appears that the Dittman report was never used by Pet in its competitive efforts with Utah Pie. Ill No. 7806 Factual Statement in the Continental Appeals These appeals involve two claims — the § 2(a) claim asserted by Utah Pie and the § 2(a) counterclaim asserted by Continental. Continental marketed its pies under the brand, Morton. It is an eight-inch, 22-ounce pie and is lighter and smaller than the pies of Utah Pie, all of which are eight-inch, 24-ounce pies. The counterclaim was based upon the differences between the prices for which Utah Pie systematically sold frozen pies to retail chain stores and the substantially higher prices for which it sold them to other customers in the Salt Lake City market. Such differences resulted from the sales by Utah Pie under private and controlled labels to favored customers, which it began in 1960. Under those labels, Utah Pie sold its only size, grade, and quality of pie to the large favored buyers at substantially lower prices than other buyers were required to pay for Utah Pie’s regular Utah brand. For example, in mid-1960 Utah Pie was selling its Utah brand frozen pie for $3.60 per dozen, while it was selling an identical pie under its Frost ‘N’ Flame brand exclusively to Associated Grocers at $3 per dozen. And on April 4, 1960, Utah Pie by letter offered to sell Safeway, packed under its Bel-air label and delivered to its warehouse in Salt Lake City, frozen apple pies at $3 per dozen and frozen cherry and boysenberry pies at $3.30 per dozen. It was also selling at that time its Sonny Boy brand for $2.88 per dozen, f. o. b. Salt Lake City, for delivery to buyers in Spokane. On the other hand, Utah Pie’s claim against Continental was based upon price differences to noncompeting customers in unrelated geographical areas. It is a “primary line” case. It is mainly based upon two isolated two-week offers of its frozen pies, one made by Continental in June, 1961, and the other in July, 1961, to buyers in the Salt Lake City market at times when Continental was a marginal seller and Utah Pie was a dominant seller in the area. It is apparent that Utah Pie’s dramatic increase in sales volume in the years 1958 to 1962, inclusive, (see table, page 142, infra) in large part was due to the low prices at which it sold frozen pies to Associated Grocers, Utah Wholesale Grocery and Safeway. Associated Grocers was the largest buyer in the market, serving 150 to 175 retail stores out of its Salt Lake City headquarters. Beginning in 1960 and continuing thereafter, Utah Pie sold Associated Grocers pies under its controlled label, Frost ‘N’ Flame. That pie, identical with the pie marketed by Utah Pie under its Utah brand, was exclusive with Associated Grocers and was sold at a price 50 to 60 cents per dozen less than Utah Pie charged non-favored competing purchasers for its Utah brand. Associated Grocers’ tremendous competitive advantage, thus attained, caused it to support Frost ‘N’ Flame almost exclusively in its advertising. It also guaranteed Utah Pie’s dominant position in the market by foreclosing the largest buyer from effective competition. Frost ‘N’ Flame quickly replaced Utah brand as the leading brand. Utah Pie also produced pumpkin and mince pies for Safeway, the second largest buyer, under Safeway’s private label, Bel-air, at prices substantially below those it charged for its identical pie sold under the Utah label to nonfavored competing stores. Utah Pie also continually offered Safeway a preferentially low price on its frozen fruit pies packed under its Bel-air label. Safeway rejected those offers, not because of price, but for another reason fully set out in the Factual Statement in the Pet Appeal. In its first year of sales of Bel-air mince and pumpkin pies to Safeway, 1960, Utah Pie charged what Utah Pie later itself said was a “rock bottom” price, with the hope that it would induce Safeway to drop its then supplier, Pet Milk, in favor of Utah Pie. In 1961, Utah Pie began selling its private label Mayfresh pies to Grand Central-American Stores, another of the four large buyers in the Salt Lake City market. The adverse impact on Utah Pie’s competitors was very substantial. From the time Utah Pie gave Associated Grocers its controlled label preference, Continental was unable to sell Associated Grocers a single pie. After Utah Pie began its controlled label sales to Grand Central Stores, Continental was unable to sell that company, and when the arrangement was extended early in 1962 to American Food Stores, which had been acquired by Grand Central, Continental lost the only chain that had been a more or less steady customer. Similarly, as to Safeway, Continental, up to June, 1961, was unable to make a single sale. In that month it made a sale to Safeway’s food stores in Salt Lake City. Continental enjoyed substantial sales in the Salt Lake City market in 1957, but from 1958 to 1960, inclusive, it was a negligible competitor in the Salt Lake City market. With the advent of Utah Pie as a competitor in 1958, Continental’s volume in dozens fell to 754 and its market share to 1.3 per cent. In 1959, its volume of sales in dozens was 3,182 and its market share 2.9 per cent. In 1960, its volume of sales in dozens was 3,350 and its market share 1.8 per cent. In 1961, its sales increased and its total volume in dozens of sales in that year was 18,799.5 and its market share 8.3 per cent, but by the beginning of the fourth quarter of 1960, Continental had reduced the cost of its pies laid down in more nearly compete with Utah Pie’s prices in the Salt Lake City market area. Salt Lake City to a point where it could Another basis of comparison is the number of times food retailers advertised Utah Pie’s brands and Continental’s Morton brand during the years 1957 to 1961, inclusive. This, because the undisputed evidence clearly established that retail newspaper advertising is necessary to frozen pie sales success. The following table shows the number of times retailers advertised the respective brands of Utah Pie and Continental in the five-year period. 1957 1958 1959 1960 1961 Utah Pie 3 27 30 59 76 Continental 13 0 3 1 5 After the entry of Utah Pie into the Salt Lake City market in 1957, with its lower priced pies, Continental, because of its higher costs of production and transportation, was unable to keep its prices competitive with Utah Pie’s prices. In 1960, with the advent of Utah Pie’s controlled and private label prices, Continental ceased to maintain a sales representative in the market and was virtually out of the market. However, Continental continued in an effort to reduce its costs of production in order to become competitive. In 1960, it was successful in locating a “co-packing” operation in the heart of the California fruit growing region, which permitted fruit to be processed directly from the trees into the finished pie, without large intermediate packaging, storing and shipping expenses. By such efforts, Continental was able to reduce its cost of apple pies laid down at Salt Lake City from approximately $3.75 per dozen in 1958 to approximately $2.80 per dozen in the second quarter of 1961. See chart annexed hereto as Appendix YI. It was also able to reduce its costs of other flavors laid down in Salt Lake City in comparable amounts. Having thus reduced its costs, Continental was again in a position to offer its Morton pies direct to buyers in the Salt Lake City market at prices which it hoped might prove to be competitive. In October, 1960, Continental contracted with a Salt Lake City food broker in an effort to resume distribution of its full line of Morton frozen food products in the Salt Lake City market. For seven months, from November, 1960, to June, 1961, the broker attempted to sell Continental frozen pies at prices generally competitive with Utah Pie’s Utah brand. During that period the broker called on the trade throughout the Salt Lake City market area, offering various short-term price concessions in the form of advertising allowances on pies, as well as other products in the Continental line. On the frozen pies, these price concessions ranged from $1.20 per dozen off the $4.50 list price on mince pies to 84 and 70 cents per dozen off the $4.00 list price on apple, cherry, and boysenberry pies, respectively. At these net prices, Continental was able to make only a total of seven sales to three small buyers in the outlying areas of Ogden, Boise, and Po-catello. It could make no sales to the major buyers, all located in Salt Lake City. The few sales it made did not adversely affect Utah Pie. During those seven months, Continental’s best price offers, made on the price-per-ounce basis used by professional buyers in comparing prices, were competitive with prices offered by Utah Pie on its Utah brand. By June, 1961, it seemed apparent that if Continental was to recapture any portion of the market, it had to make better offers. Continental was unable to sell to small buyers in the Salt Lake City area, because they lacked the refrigerated storage space necessary to buy direct from Continental. Continental could sell not less than a quarter of a truckload. Utah Pie, with its plant in Salt Lake City, was the only manufacturer who could feasibly sell directly to the small buyers. Of the largest buyers, Associated Grocers was handling Frost ‘N’ Flame brand at $3.10 per dozen, the lowest price on the market; Grand Central was about to close a deal with Utah Pie for its own private label, Mayfresh, at the same prices charged Associated Grocers; and Safeway was buying its Bel-air frozen fruit pies exclusively from Pet Milk, from whom it could purchase three brands, including its own private label, in combined truckload shipments. Confronted with that situation, Continental’s broker recommended that it meet the price being charged to Associated Grocers and offered to Grand Central, by offering apple pies at $2.85 per dozen on full truck quantities. This was approximately the ounee-for-ounce equivalent of Utah Pie’s $3.10 price. Indeed, Continental’s price was 1.08 cents per ounce and Utah Pie’s price was 1.07 cents per ounce. In comparing Continental’s prices with Utah Pie’s prices, the fact that Continental’s pies were 22 ounces in weight and Utah Pie’s pies were 24 ounces in weight should be taken into consideration. Professional buyers evaluate competing offers on a price-per-ounce basis, although retail purchasers do not always give attention to the differences in the size of pies. Moreover, Continental’s price was for full truck orders, only, while Utah Pie’s price applied to orders of any size, down to a few dozen. Continental approved the recommendation and a $2.85-$2.89 delivered price, depending on quantity ordered, was offered for a two-week period to those few buyers potentially able to buy from Continental. At the same time, Continental extended on a continuing basis for the Salt Lake City market area an offer of 30 cents per dozen freight allowance. At these prices, Continental made sales to American Food Stores in Ogden and to Associated Grocers in Pocatello, a small independent branch in Pocatello, both of which had previously purchased Morton pies, and at the time of the sale were not purchasing from Utah Pie. In June, 1961, the merchandising manager for Safeway’s food stores in Salt Lake City, purchased 6,250 dozen frozen pies, their requirement for five weeks, from Continental, and in July, 1961, Grocers Wholesale of Salt Lake City, a small wholesaler just starting in business, ordered 1,000 dozen frozen pies from Continental. Utah Pie responded to Continental’s offer, which lasted only two weeks and was once renewed a month later for the same period, by reducing its price on all of its 24-ounce apple pies, whatever the brand name, to $2.75 per dozen and offering all the customers unlimited quantities, to be delivered in lots of any size. When Continental learned of such offer by Utah Pie, and the merchandising manager for Safeway’s food stores in Salt Lake City urged it to further reduce its price, it agreed with him to cancel an order he had already placed at the $2.85 price; and also offered to cancel another order placed by American Food Stores, rather than reduce its price to Utah Pie’s offer, but American Food Stores did not elect to cancel its order. During the period 1958 to 1962, inclusive, in the Salt Lake City market, . Continental reached its highest sales volume in June and July, 1961. Thereafter, its sales volume continuously decreased through 1962. Its 1962 sales volume was 8,685 dozen less than its 1961 volume. June and July, 1961, were also high sales volume months for Utah Pie, higher than any of the five preceding months and many other earlier months; and from July, 1961, on through 1962, its sales volume continued to increase. Its sales volume reached a new annual high in 1962, when it showed an increase of 26,968.3 dozen over 1961. Thus, Utah Pie effectively maintained its dominant position and discouraged further efforts by Continental to meet the low prices which Utah Pie continued to maintain throughout 1961 and 1962. Continental was able in 1961 to increase its volume to 18,799.5 dozen and its market share percentage to 8.3, but in 1962 its volume dropped to 10,114.5 dozen, while Utah Pie’s volume in that year was 129,658.3 dozen, an increase of 26,968.3 dozen over 1961. The record does not reflect facts from which market shares can be computed in 1962. Invoices of sales of frozen pies by Continental in the Salt Lake City market during the period 1958 to January, 1962, inclusive, showed 142 items were sold at a profit and three items, one in 1958, one in 1961, and one in January, 1962, at a loss, before allocation of overhead costs. Its overall sales showed a profit before deduction of overhead. After such allocation, an overall loss was reflected. Had Continental been able to develop a substantial volume of sales in such market, it no doubt would have been able to realize a profit after overhead was charged. But when it looked as though its efforts would become fruitful by the contract it secured with the Salt Lake City Safeway stores and Grocers Wholesale in 1961, Utah Pie reduced its price on its Utah and Frost ‘N’ Flame brands and the contract with Safeway was cancelled. Utah Pie maintained its reduced price for a long period thereafter. Utah Pie also suffered a loss on its sales of frozen pies in 1958, notwithstanding it captured 66.5 per cent of the Salt Lake City market area in that year and sold a large volume of pies, and notwithstanding its low transportation and selling costs and its other competitive advantages. Its low price in 1958 could not, therefore, be justified by lower costs. By a large increase in its volume in 1959, 1960, and 1961, it was able to make substantial profits, just as it is fair to say Continental could have done, from 1961 on, had it succeeded in obtaining a substantial volume of sales. The following table graphically shows a comparison of Utah Pie’s and Continental’s respective sales volume and market share percentage for the years 1958 to 1961, inclusive, and the sales volume for 1962 in the Salt Lake City market. Sales Volume % of in Dozens Market 1958 (Utah Pie 37,969.5 66.5 (Continental . 754 1.3 1959 (Utah Pie 38,372 34.3 (Continental 3,182 2.9 1960 (Utah Pie 83,894 45.5 (Continental 3,350 1.8 1961 (Utah Pie 102,690 45.3 (Continental 18,799.5 8.3 1962 (Utah Pie 129,658.3 (Continental 10,114.5 IV No. 7308 Factual Statement in the Carnation Appeal The claim against Carnation was tried on the theory of low prices in the Salt Lake City market and high prices in the Los Angeles market, at which Carnation sold its frozen pies. Carnation entered the frozen pie business in 1955, by acquiring a Los Angeles company then engaged in manufacturing and selling frozen pies in Utah and elsewhere under the Simple Simon label, or brand. Carnation made substantial improvements in its predecessor’s plant at Torrance, California, (near Los Angeles) and radically altered its distribution system. At all times here material, Carnation marketed its Simple Simon pies in all western markets, that is, Los Angeles, San Francisco, Portland, Boise, Seattle, Spokane, Phoenix, Salt Lake City and Denver. Shortly after Carnation entered the field, the frozen pie business became highly competitive, marked by the introduction into the market of national brands, such as Pet’s Pet-Ritz, Continental’s Morton, and a number of other national brands. Also, in some of such national markets there were regional brands, such as Mary Elizabeth, County Fair, Frigid Dough, Chet’s and others, and also those of local manufacturers, such as Utah Pie, with their brands. In order to meet the competitive activities of other manufacturers in the various markets in which it sold its pies, Carnation developed a program of special temporary price reductions, varying from market area to market area, and depending on local competitive conditions. These programs were called “deals” in the trade. In some areas they took the form of advertising allowances, identical with those described in the General Statements of Facts, supra. However, in Utah the allowances were not permitted to be considered in computing “cost” under the Utah “cost plus six per cent” minimum markup law (13-5-7 Utah Code Anno. 1953). Carnation accordingly adopted “off invoice” deals for Utah and other markets where similar statutes were in effect. Both types of deals had the same competitive purpose, namely, to induce the retailer to purchase and advertise Carnation pies and thereby meet the competitive tactics of other manufacturers having a like aim. All deals had two aspects in common. They were of a temporary nature and they were offered to all purchasers alike in each market. Since deals were directed at local competitive conditions, they differed in duration, type and amount in each market area, so that Carnation’s net prices in each of the national market areas also frequently differed. At times during the period 1958 to 1961, Carnation’s prices in the Utah area were higher than those charged in the Los Angeles area and at times they were lower. There was no relationship between the prices in the two areas. The price in each was determined by local competitive conditions. In addition to Utah Pie’s lower price structure, other competitive conditions in the period 1958 to 1961 affected the market price and the market for Simple Simon pies in the Salt Lake City market. In 1958, Safeway introduced a private brand, Bel-air, manufactured by the Pet Milk Company. Though of a similar grade and quality, it was sold at a lower price than Simple Simon. In late 1959, Utah Pie introduced a controlled label, Frost ‘N’ Flame, for marketing through Associ