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UNITED STATES v. HAMMERMILL PAPER CO.

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


March 16, 1977

United States, Plaintiff
v.
Hammermill Paper Co., Defendant

Weber, C.J.

The opinion of the court was delivered by: WEBER

WEBER, C.J.:

This is the forest primeval. The murmuring pines and the hemlocks,

 

Bearded with moss, and in garments green, indistinct in the twilight,

 

Stand like Druids of eld, with voices sad and prophetic,

 

Stand like Harpers hoar, with beards that rest on their bosoms.

 

Evangeline, H.W. Longfellow

 

"Well, essentially, Fraser's business is certainly quite a bit different than Hammermill's business. We are kind of a little Weyerhaeuser in that we have a vast number of trees and the trees sit in the forest growing and when they reach maturity they have to be cut, and there is a tremendous impetus to keep cutting the trees and keep running the machines because the trees keep growing and we have a difficult time generally keeping up with the cut. My guess is that Hammermill's tree position is considerably different than ours.

 

Mr. Dolan, Fraser Paper Co. Testimony, Tr. 895.

 Introduction

 This is an action brought by the United States under 15 U.S.C. § 25 which complains that Defendant Hammermill Paper Company (Hammermill) violated Section 7 of the Clayton Act (15 U.S.C. § 18) by its acquisition of the assets of Western Newspaper Union (WNU) and all of the capital stock of Carter Rice Storrs and Bement, Inc. (Carter Rice). The complaint prays for an order of divestiture, an injunction and such further relief as the court may deem appropriate.

 Section 7 of the Clayton Act (15 U.S.C. § 18) provides:

 

No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or tend to create a monopoly.

 Jurisdiction and Venue

 Hammermill is a corporation organized and existing under the laws of Pennsylvania, with its principal office in Erie, Pennsylvania, and transacting business and being found within the Western District of Pennsylvania. At all times pertinent it has shipped and sold paper products in interstate commerce.

 Western Newspaper Union was a Delaware corporation with its principal office in New York, N.Y., prior to the acquisition of its assets by Hammermill in 1961, and purchased and sold paper products which were shipped in interstate commerce.

 Carter Rice Storrs and Bement, Inc., is a Massachusetts corporation with its principal office in Boston, Massachusetts, and at the time of the acquisition of its stock by Hammermill in 1966 it purchased and sold paper products which were shipped in interstate commerce.

  The Line of Commerce

 By agreement of the parties the line of commerce in this case within the meaning of Sec. 7 of the Clayton Act is the manufacture and sale of printing and fine paper for the purpose of measuring the effects of the acquisitions challenged in this litigation. The term "printing and fine paper" includes coated and uncoated book papers, coated and uncoated printing papers, offset papers, text and cover papers, sulphite bond papers, rag or cotton content papers, mimeograph and duplication papers, onionskin, ledger papers and bristols.

 Printing and fine paper is principally sold by mills to book and magazine publishers, and by paper merchants to commercial printers and lithographers, communication centers, stationers, insurance companies, plants, institutions and schools having inhouse printing and duplicating operations, and by mills to greeting card and envelope manufacturers and other converters.

 In the context of this case Hammermill is a manufacturer or "supplying firm", and Western and Carter Rice are paper merchants or "purchasing firms".

 Hammermill Paper Company

 Hammermill was founded in 1898. It produces printing and fine papers at mills located in Oswego, New York; Lock Haven, Pennsylvania; Erie, Pennsylvania; Hamilton, Ohio; Watervliet, Michigan; West Springfield, Massachusetts; Turners Falls, Massachusetts; and Woronoco, Massachusetts. Hammermill is also a one-third owner of a printing and fine paper mill located in Hoquiam, Washington, and is responsible for selling its entire production.

 Among the 20 leading manufacturers of printing and fine papers, Hammermill ranked sixth in total United States tonnage and share of the industry in 1967, its share being 4.98%.

 In 1966 it ranked fifth with 5.07% of total United States shipments; in 1970 it ranked seventh with 4.29%, and in 1971 it ranked sixth with 4.4%.

 However, in the line of fine paper or writing paper, including rag or cotton content papers, ledger papers, and sulphite bond papers, it is the world's largest producer, accounting for 9.5% of United States shipments in 1967. Hammermill's share of the major segments of the printing and fine paper line for 1967 are: Uncoated book paper 5.0% Coated paper 2.6% Fine paper 9.5%

19770316

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