Quaker Oats Co. has been dropped as one of four companies involved in a landmark Federal Trade Commission antitrust case alleging a "shared monopoly" in the ready-to-eat cereal industry.
An administrative law judge ordered the dismissal last Friday in an opinion made public yesterday. Quaker, based in Chicago, called the decision "a victory for our competitive economic system and for free consumer choice."
Although the FTC could review the decision by Judge Harry R. Hinkes, that appeared unlikely yesterday because the agency's own Bureau of Competition supported Quaker in seeking to remove the firm from a six-year old case.
The FTC staff told Hinkes that it remains convinced that Quaker engaged in anticompetitive practices and that the company enjoyed been fits from a monopoly power allegedly shared by the industry's four top firms (the others are Kellogg Co., General Mills Inc. and General Foods Inc.).
But the FTC also said that the case record fails to show that an order against Quaker "is necessary to restore competition to the industry and that to dismiss Quaker would expedite the case against the remaining respondents." Hinkes said in the decision released yesterday.
Filed in 1972, the FTC case calleged that the four firms for at least 30 years shared a monopoly that controlled more than 90 percent of the U.S. cereal market.
Officials of the Bureau of Competition were not available last night to comment on the Quaker decision and an agency spokesman said it would be "inappropriate for commissioners" to discuss the case at this point.
In Chicago, Luther C. McKinney, Quaker senior vice president for law, said the judge's action amounts to a "complete vindication of Quaker (and) is fully consistent with the position we have taken on this matter" since the case first was filed.
He called the charges "unfounded" and said Quaker was forced to spend $1.9 million of stockholders' money to date to defend itself. "Essentially, it is a test case of the academic theory that competition is insufficient for the public good when a few producers supply the major portion of the marketplace for a particular line of products, even when there is no allegation of conspiracy or collusion," he added.