The Federal Trade Commission, using a broad interpretation of antitrust law, yesterday ordered E. I. du Pont de Nemours & Co. and Ethyl Corp. to end a system of allegedly anticompetitive pricing mechanisms in the sale of lead-based, antiknock gasoline additives.
"We are faced with an industry exhibiting strikingly poor competitive structure and performance and one where the evidence shows particular practices have contributed to consistent uniform" pricing, declared Michael Pertschuk, the commissioner who wrote the 3-1 majority opinion.
The commission ruling is significant beyond the scope of the question of lead additives, because it found, in effect, that proof of collusive, conspiratorial actions by companies is not necessary for a commission finding that the companies engaged in anticompetitive practices.
The commission chairman, James C. Miller III, issued a strong dissent, declaring:
"Today the commission embarks on a bold new adventure to the frontiers of antitrust law, clearing no path for those who follow, and leaving no signposts to guide the inexperienced traveller. . . . The implications of today's decision are potentially both far-reaching and harmful to competition."
Although the ruling would appear to be a significant expansion of the interpretation of antitrust law, Miller's dissent mitigates the actual consequences. As chairman, he sets the investigative agenda for the FTC staff and can prevent similar cases from coming before the FTC, an aide to Pertschuk noted.
Richard Heckert, Du Pont's vice chairman, said the firm's business practices "have been entirely legal and ethical" and the company will appeal the decision, which carries no monetary penalties.
"It is absurd that the agency chose a sharply declining industry in an attempt to carve out for itself a new area of enforcement that goes far beyond its statutory role in policing collusion or conspiracy, neither of which is involved in this case," Heckert said. A spokesman for Ethyl Corp. had no immediate comment.
The majority ruling ordered the two firms to cease and desist from the following pricing practices:
"Publishing, distributing or communicating in any manner notice to any person outside the company, other than persons under contract in connection with marketing or sales, concerning any change or modification in the list price of lead-based antiknock compound in advance of the period contracturally required for advance notice to customers."
"Entering into a contract for the sale or delivery of lead-based, antiknock compound" with any contract provision requiring that the buyer be offered the company's lowest price under what are known as "most favored nation" agreements.
In addition, the companies must offer a separate price if the oil company buying the antiknock compound transports the goods.
Instead of conspiring to fix prices, Pertschuk said the companies engaged in "facilitating practices" that resulted in a situation where "the industry exhibited a consistent pattern of price-matching, including price leadership by the two industry leaders, a well-developed system for announcing price by 'testing the waters,' a response by the other major industry members, and subsequent falling into line by the two smaller competitors."
The commission found that the two smaller competitors, PPG Industries Inc. and Nalco Chemical Co., used uniform delivered pricing, but the order did not apply to them.