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Y & Y POPCORN SUPPLY CO. v. ABC VENDING CORP.

January 25, 1967

Y & Y Popcorn Supply Co.
v.
ABC Vending Corp., Berlo Vending Co., and Jacob Beresin


Joseph S. Lord, III, D.J.


The opinion of the court was delivered by: LORD, III

JOSEPH S. LORD, III, D.J.

 Plaintiff brought this treble damage antitrust action under the Clayton Act, charging defendants with violations of Sections 1 and 2 of the Sherman Act *fn1" and Section 7 of the Clayton Act. *fn2" In order to expedite their preparation for trial, the parties have asked us to rule in limine on the applicability of Section 5(a) of the Clayton Act *fn3" to the present suit. Specifically, the question presented is whether the plaintiff can make use of a Federal Trade Commission (FTC) consent order entered against the corporate defendants, and, if so, to what extent.

 I.

 On November 4, 1959, the FTC issued its complaint against the defendants. Count I charged violations of Section 7 of the Clayton Act, arising from the acquisition by defendants in 1957 of two companies: "Sweets", a firm operating in the "Philadelphia Film Exchange Area", *fn4" and "Confection", a company operating largely in the "New York Film Exchange Area." *fn5" Count II charged the defendants with "unfair methods of competition" proscribed by Section 5 of the Federal Trade Commission Act *fn6" (FTC Act) and occurring in both the New York and Philadelphia Film Exchange Areas. This count repeated and incorporated by reference the charge of unlawful acquisitions as one basis of a Section 5, as opposed to a Clayton Act violation, and added alleged abuses which consisted of making preclusive loans and affording other inducements to customers, requiring preclusively long contract commitments from customers, and exacting favored treatment from suppliers.

 The examiner's decision was the subject of appeal by both sides. The prosecutorial arm of the FTC wanted additional sanctions against the practices enumerated in Count II of the complaint; the defendants demanded exoneration. However, on September 29, 1964, an agreement and stipulated order was signed in which the defendants admitted "all of the jurisdictional facts alleged in the complaint * * *." With respect to all other matters, the agreement recited that "[the] Commission has not made and will not make any adjudication or determination of any issue of law or fact presented by the complaint in this proceeding."

 The Commission's decision and order was issued on October 22, 1964. The Commission "determined that it should waive * * * the timely filing of notice of intent to enter into a consent agreement" *fn7" and made findings of jurisdictional fact. It then ordered the divestiture of "motion picture theater concessions and contract rights for the operation of motion picture theater concessions * * * having aggregate concessionary sales of not less than $4,000,000 of which not less than $3,500,000 shall be in the New York and Philadelphia film exchange areas * * *." Additional terms of the order dealt with ancillary divestiture assurances as well as the other abuses enumerated in Count II of the complaint. In accordance with the consent agreement, the order contained no other findings of fact or conclusions of law.

 It is this order which plaintiff wishes to use in the present suit.

 II.

 Plaintiff's complaint, which was filed on September 12, 1960, is largely a catalogue of the anti-competitive abuses charged in the FTC proceeding. There is appended, of course, the critical allegation that defendants' conduct had an adverse economic impact on plaintiff.

 The operations of the respective parties differ in that plaintiff is a wholesale merchant of candy and pop-corn selling to theater owners in the Philadelphia area, whereas defendants are concessionaires, selling directly to the public from vending machines and booths within client theaters located in both the New York and Philadelphia areas.

 III.

 Section 5(a) of the Clayton Act allows the use in private antitrust suits of decrees resulting from government actions as prima facie evidence of matters determined in the antecedent government suit which "would be an estoppel" between the government and the defendant. The proviso, exempting consent decrees "entered before any testimony has been taken" does not apply here because the FTC order was entered only after the hearing examiner had ...


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