Cement Manufacturers’ Assn. v. United States, 268 U.S. 588 (1925)

Cement Manufacturers’ Protective Association v. United States

No. 551

Argued March 3, 5, 1925
Decided June 1, 1925
268 U.S. 588

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE SOUTHERN DISTRICT OF NEW YORK

Syllabus

1. Dissemination of information enabling sellers of goods under contracts for future delivery individually to prevent purchasers from fraudulently procuring deliveries on the pretense that the sellers are obligated by their contracts to make them is not an unlawful restraint of trade, even though the information be gathered by and disseminated among the sellers themselves through cooperation. P. 603.

2. Cooperation of manufacturers in gathering and exchanging (1) information concerning production of cement and the prices for which it was sold by them in actual, closed "specific job" contracts constituting but a part of their business, and (2) information of transportation costs from chief points of production held not an unlawful restraint on commerce even assuming that the result may tend to bring about uniformity of price through the operation of economic law. P. 604.

3. In this case, the government did not rely upon any agreement or understanding for price maintenance, and the record fails to establish, either directly of by inference, any concerted action other than that involved in the gathering and dissemination of information respecting sale and distribution, which, in itself, the Court finds not unlawful; nor does the evidence show any effect on price and production except such as would naturally flow from the dissemination of such information in the trade, and its natural influence on individual action. P. 606.

4. In a suit under the Anti-Trust Act to dissolve a trade association formed by numerous manufacturers of Portland cement, it appeared: (1) that, following trade practice, each manufacturer disposed of part of its product through "specific job contracts" -- i.e., contracts in effect obligating the manufacturer to deliver in the future to the purchaser at a maximum price named, payable on delivery, the cement required to complete a specified piece of construction work, but allowing the purchaser the advantage of any decline, before delivery, in market price, and not obligating him, in any event, to take the cement contracted for; (2) that, to prevent contractors from obtaining more cement than they were entitled to under such contracts by the practice of entering into several such contracts with several manufacturers for the same specific job, the details of such contracts were reported by the members to the Association, agents of the latter visited the jobs, and the fullest information respecting the contracts and the use of cement shipped under them was reported to the members by the secretary, and there were many cancellations of deliveries under such contracts on the ground that purchasers were not entitled to delivery by the terms of their agreements; (3) that the Association compiled and distributed to its members books listing freight rates from established basing points to many cities and towns, enabling the manufacturer to calculate a delivery price on the basis of its own mill price (determined by itself) to places nearest in point of freight rate to its own mill, and also to determine at once the freight differential it must offset in its mill price in order to compete with other manufacturers serving any other given territory; (4) that members of the Association rendered monthly detailed reports concerning delinquent accounts of their customers; (5) and reports of production, shipments and stock on hand, which, being compiled and distributed, informed each member fully of the available supply of cement and by whom it was held; (6) that, by universal practice of the trade, the price of bags in which cement was shipped was included in the mill base price, and that quarterly reports were made to the Association showing the total number of bags returned to each member by customers during the preceding quarter and the percentage found unfit for use, but no information was reported concerning the charge and allowance for bags returned, the number received from any particular customer, or the portion found unfit for use; (7) that periodical meetings were held at which minor subjects, such as return of bags, bag reports, and trade acceptances were discussed, but not current or future prices, or production or market conditions, which meetings were not proved to have resulted in any agreement or in any uniformity of trade practice. Held that a purpose to control production and price of cement could not be inferred from such activities, and they were not in themselves unlawful restraints of commerce prohibited by the Anti-Trust Act. P. 592.

Reversed.

Appeal from a decree of the district court in a suit brought by the government under the Anti-Trust Act enjoining the continuance of a combination of various cement manufacturers in the form of a trade association.