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THERMICE CORP. v. VISTRON CORP.

July 18, 1979

THERMICE CORPORATION
v.
VISTRON CORPORATION and Airco, Inc.



The opinion of the court was delivered by: BRODERICK

MEMORANDUM

Plaintiff, Thermice Corporation (Thermice), a Pennsylvania corporation with its principal place of business in Pennsylvania, brings this action against defendants Vistron Corporation (Vistron), an Ohio corporation with its principal place of business in Ohio, and Airco, Inc. (Airco), a Delaware corporation with its principal place of business in New Jersey, seeking (1) to enjoin Vistron and Airco from making available to Airco a supply of carbon dioxide in accordance with a contract which Vistron and Airco contend requires Vistron to furnish Airco 69% Of its available supply, and (2) to enjoin Vistron to make available to Thermice a supply of carbon dioxide in accordance with a contract between Vistron and Thermice which Thermice contends requires Vistron to make available to it quantities of carbon dioxide in amounts far greater than 31% Of its available supply. On June 27, 1979, this Court issued a temporary restraining order. *fn1" Presently before the Court is plaintiff's motion for a preliminary injunction. A hearing was held concerning this motion on July 9, 1979. For the reasons hereinafter discussed, plaintiff's motion for a preliminary injunction is denied.

 At the hearing on July 9, 1979, Thermice presented the testimony of Robert P. Richards, Executive Vice President of Thermice, and Joseph T. Brennan, National Distribution Manager of Thermice. Mr. Richards testified that Thermice requires more than 300 tons per day of carbon dioxide in addition to that produced at its Iowa plant in order to meet its contractual commitments. More than 200 tons per day are distributed in the Midwest region and approximately 100 tons per day are distributed in the Eastern region. He also testified that, in 1978, Thermice's Iowa plant produced approximately 37% Of Thermice's total requirements of carbon dioxide, and Vistron provided approximately 53%. The remaining 10% Was sold to Thermice by a Terre Haute, Indiana plant or purchased on the spot market.

 Defendant Airco is engaged in the manufacture and distribution of carbon dioxide and is one of Thermice's competitors in the Eastern marketing area. *fn2" It has approximately 375 customers in the Eastern United States. Airco has a long-term supply contract for carbon dioxide with Vistron.

 A cease and desist order was entered against Airco by the Federal Trade Commission, In the Matter of Pure Carbonic, Inc., et al., 44 F.T.C. 1029, 1072 (1948), enjoining Airco, among others, from entering into or carrying out agreements with manufacturers of carbon dioxide whereby it would agree to purchase the entire output or a substantial portion of their output. Two consent decrees entered against Airco in settlement of antitrust suits brought by the Department of Justice, United States v. Liquid Carbonic Corp., 1952 Trade Cas. P 67,248 (E.D.N.Y.1952) and United States v. General Dynamics Corp., 1962 Trade Cas. P 70,401 (E.D.N.Y.1962), included provisions enjoining Airco from taking action which would limit or restrict the production or sale of carbon dioxide.

 Defendant Vistron operates an ammonia plant in Lima, Ohio and produces carbon dioxide as a by-product of the manufacture of ammonia. After using a certain quantity of carbon dioxide in its internal processes, Vistron sells the remainder. At full capacity Vistron produces approximately 550 tons of carbon dioxide per day, seven days per week, eleven months per year (the plant closes one month per year for maintenance). Vistron has long-term contracts only with Thermice and Airco for the purchase of carbon dioxide by them.

 Shortages are a fact of life in the carbon dioxide industry. Because carbon dioxide is produced as a by-product in the manufacture of unrelated products, its supply varies according to the demand for the main product and not according to the demand for carbon dioxide. Shortages occur most frequently during periods when plants are shut down for maintenance work and during the summer months when demand for carbon dioxide is at its peak. To help deal with these shortages, carbon dioxide is available on a spot market whereby a carbon dioxide distributor can purchase products from other carbon dioxide distributors at a set price of $ 30 per ton. Availability of carbon dioxide on the spot market varies on a daily basis.

 
Airco understands that Vistron has concurrent contracts to supply liquid and solid product from the facility. In accordance with these commitments and irrespective of any other provision hereof, Vistron will apportion to Airco sixty-nine (69) percent of the available supply of liquid product.

 This contract was amended in part by an agreement between Vistron and Airco dated and to become effective on January 1, 1977. The price provision was amended to make the base price equal to $ 12 per ton. There was no amendment to the allocation provision of the original contract.

 On October 8, 1970 Vistron and Thermice entered into a written contract for the purchase by Thermice of quantities of carbon dioxide manufactured by Vistron at the same Ohio plant. Paragraph 5 of this contract provided that "Vistron will make available to Thermice a maximum of 180 tons per day." *fn3" In Paragraph 10a of the addendum to the original contract, the allocation provision stated:

 
Vistron will apportion the available supply of liquid carbon dioxide to each contract customer as of the date of the execution of this contract in direct proportion to its ...

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