A Federal Trade Commission judge threw out a controversial FTC antitrust case against E. I. du Pont de Nemours & Co. for alleged monopolization of the titanium dioxide pigment market yesterday, saying the chemical giant was guilty only of "business foresight, intelligent planning (and) dedicated technological application . . ."
Administrative Law Judge Miles J. Brown said the FTC couldn't sustain its charge that Du Pont was acting in an anticompetitive manner by unfairly attempting to monopolize the production of the pigment, which is used primarily to whiten and brighten paint, paper, plastics, textiles and other products.
The case was watched closely by the business lobby in Washington, and often held up as an alleged example of the FTC "overreaching its boundaries." Several prominent corporate executives, led by Du Pont Chairman Irving S. Shapiro, had warned that had the FTC been succesful, a precedent would be set that would serve to discourage risk-taking and innovation.
Staff counsel at the FTC said they intended to appeal the case to the commission, but because of intense pressure from Congress to curb its more ambitious activities, commission sources say the FTC isn't likely to approve an appeal.
The original FTC complaint against Du Pont, made on April 10, 1978, charged the company with unfairly using its dominant position, size and economic power in an attempt to monopolize the market in the pigment. The FTC charged Du Pont did this, when it allegedly:
Adopted and implemented a plan to expand its domestic production capacity enough to enable it to capture all growth in domestic demand through at least the 1980s.
Refused to license its production technology to others.
Designed a pricing policy that frustrated the growth of smaller producers and forestalled entry by foreign producers.
At the time, the FTC staff called for Du Pont to divest itself of its two titanium dioxide plants, and to grant licensing agreements royalty-free for those plants to use the Du Pont technology and know-how to produce the pigment.
Although Judge Brown found that Du Pont's growth in the titanium dioxide market may have served to exclude competitors, he said, "I can find no conduct that can be considered 'unfair' within the meaning of the Federal Trade Commission Act."
According to Brown's findings, there are several methods of producing the pigment and, until the late 1960s, the production costs of all methods were about equal.
But in the early 1970s, Du Pont developed the significantly-less-costly llmenite-chloride process, which gave it a sharp competitive advantage, he found.
But Brown didn't accept the FTC staff argument that, by rapidly expanding its production capabilities to exploit its technological advantage, Du Pont was acting unfairly.
"I do not believe that Du Pont was required to price its (titanium dioxide) products high enough to ensure its less-efficient competitors sufficient revenue to finance expansion," Brown said.
Had Du Pont priced its product higher merely because competitors had to charge more, it would have resulted in "exorbitant profits" to Du Pont and greatly increased costs to the consumer, Brown said.
In a statement released from Du Pont's corporate headquarters in Wilmington, yesterday, Shapiro said "we were confident we were right, we pressed for an early trial and we are pleased that our position has been vindicated by Judge Brown's decision. In a larger sense, however, this is an important case and an important decision for the country as well as Du Pont. It removes a cloud overhanging the whole question of innovation in the U.S., and should be a spur to enlarging our national research and development efforts.