ANTITRUST GOES TO THE DOGS

• Date: 01 September 1978
• DOI: http://doi.org/10.1111/j.1744-1714.1977.tb01439.x
• Author: David R. Kamerschen
• Published date: 01 September 1978

1977

f

Antitrust

Goes

to

the

Dogs

1

249

ANTITRUST GOES TO THE

DOGS

INTRODUCTION

In an “initial decision” rendered on June

25,

1975,

Morton

Needelman, Administrative Law Judge, made a decision involv-

ing the manufacture, sale, and distribution of dog food which

should be of interest to economists, lawyers, and other interested

FTC watchers.’

Statement

of

the Case2

The Commission’s complaint, issued on August 14,

1973,

charged that .Liggett

&

Myers’ acquisition on January 29, 1969,

of Ready Foods Corporation (after the acquisition the name

of

the

firm was changed to Perk Foods, Inc.) violated Section

7

of

the

Clayton Act, as amended

(15

U.S.C.

0

18).

The complaint alleged

that the effect of the acquisition was “to substantially lessen

competition or to tend to create a monopoly in the production,

distribution and sale of dog food in the United States.” Dog food

was defined in the complaint as “all wet, dry, and semimoist

commercially prepared food for dogs exclusive of treats.”

Respondent filed its answer on September

21, 1973,

in which

it

admitted making the challenged acquisition. It also admitted

certain corporate and jurisdictional facts. Respondent denied all

other substantive allegations in the complaint, particularly those

relating to the existence of an “all” dog food relevant product

market, and the charges respecting the alleged anticompetitive

effects of the acquisition.

At

the prehearing stage some additional discovery

was

granted

to

both parties, stipulations were entered into, and the issues

were further refined.3 Specifically, respondent again argued,

as

it

had in its answer, that from an economic standpoint there is no

’

In

re

Liggett

&

Myers, FTC Docket No. 8938 (1975).

:I

Judge Needelman replaced Administrative Law Judge Andrew

C.

Goodhope,

who

was

relieved

of

the assignment on June

3,

1974. Judge Needelman presided at the Prehearing

Conferences

of

July 29, 1974, and October 18, 1974, and all evidentiary hearings.

Id.

at 11-12.

250

/

Vol.

15

/

American Business

Law

Journal

“all” dog food market, and that the acquisition could properly be

evaluated only in terms of its impact on certain economically

significant markets, namely, five separate markets including:

1)

a premium-priced canned dog food market where L&M did busi-

ness before the acquisition;

2)

an inexpensive canned dog food

market where most

of

Perk’s sales were concentrated;

3)

medium-

priced canned dog food;

4)

dry dog food; and, 5) semimoist dog

food.

Hearings were held between January

10,

1975, and January

30,

1975.

All

counsel were afforded full opportunity to be heard and

to examine and cross examine witnesses.

The record was left open until February

5,

1975,

for the receipt

of additional stipulations. Proposed findings

of

fact and conclu-

sions of law, together with supporting briefs, were filed by the

parties on March

7,

1975, and replies were filed on March

24,

1975.4

Judge Needelman’s Conclusions

After reviewing the evidence, the proposed findings, and con-

clusions submitted by the parties and based on the entire record,

including his observation of the witnesses, Judge Needelman ren-

dered the following conclusions:

1.

The Federal Trade Commission has jurisdiction of the subject

matter of this proceeding and of respondent, Liggett

&

Myers Incorpo-

rated.

2.

Respondent, Liggett

&

Myers Incorporated, Allen Products

Company, Inc., and Ready

Foods

Company (now Perk) were

at

all

times material herein, corporations engaged in commerce, as

“commerce” is defined in the Clayton Act, as amended.

3.

The proper product market within which to determine the proba-

ble effects of this acquisition, for purposes of this proceeding, is the

manufacture, sale and distribution

of

dog food.

4.

The proper geographic market within which to determine the

probable effects of this acquisition, for purposes of this proceeding,

is

the United States as a whole.

5.

The effect of the acquisition by Liggett

&

Myers Incorporated

of

Ready Foods Company (now Perk) has been, or may be to substantially

’

By

leave

of

the

Commission

and

because

of

prior

trial

commitments

of

the administra-

tive

law

judge,

the

time

for

filing

an

initial decision

was

extended

from

May

6,

1975,

to

June

30,

1975.