| **DISSENTING STATEMENT OF COMMISSIONER ORSON    SWINDLE**

*IN THE MATTER OF*

STONE CONTAINER CORPORATION

DOCKET NO. C-3806

I have voted against the Commission's issuance of its complaint and final order in this    case because I do not believe that the facts unearthed and presented in the investigation    support the allegation that Stone Container ("Stone") invited its competitors    "to join a coordinated price increase."

The Commission's complaint alleges that Stone took several actions in the second half    of 1993 that amounted to an invitation to collude on linerboard prices. According to the    complaint, Stone's invitation-to-collude strategy consisted at the outset of a plan    "to take downtime at its plants, to reduce its production by approximately 187,000    tons, and contemporaneously to purchase 100,000 tons of linerboard from competitors and to    reduce Stone Container's inventory by 87,000 tons." To carry out this plan, Stone    allegedly "conducted a telephone survey of major U.S. linerboard manufacturers,    asking competitors how much linerboard was available for purchase and at what price."

Pursuant to its scheme, Stone's "[s]enior officers" -- whose role in this    regard is alleged to have been "outside the ordinary course of business" --    "contacted their counterparts at competing linerboard manufacturers to inform them of    the extraordinary planned downtime and linerboard purchases." Stone "arranged    and agreed to purchase a significant volume of linerboard from each of several    competitors" and is alleged to have "communicated to competitors" -- both    in private conversations and through public statements -- "its intention to take mill    downtime and to draw down industry inventory levels, and its belief that these actions    would support a price increase." The complaint asserts that Stone's communications    with its competitors on these subjects were made with "[t]he specific intent . . . to    coordinate an industry wide price increase" and that Stone's actions "were    undertaken with anticompetitive intent and *without an independent legitimate business    reason*" (emphasis added).

I have quoted at length from the complaint because it (together with the Analysis To    Aid Public Comment that accompanied acceptance of the consent agreement) is the document    in which the Commission sets forth its theory of violation and, to the extent permissible,    the evidence underlying that theory. As I see it, the acts and communications of Stone    alleged in the complaint, as well as other evidence in this case, do not sufficiently    support the Commission's theory of violation.

As 1993 approached, Stone and other firms in the linerboard industry had been and were    experiencing financial difficulties, including excess production capacity, alleged excess    inventory, and depressed price levels. It should hardly be surprising that Stone chose    mill downtime and inventory reductions as a normal competitive response to general    industry conditions. "Extraordinary" as Stone's downtime and inventory purchases    may have been, it is difficult to second-guess the rationality of those actions from a    business perspective. The assertion in the complaint that Stone's actions "were    undertaken with anticompetitive intent and without an independent legitimate business    reason" is a considerable stretch.(1) If senior officials of Stone    had been more circumspect in their statements -- particularly their public statements --    about Stone's reasons for its own downtime and purchase decisions, I doubt that the    Commission would have considered this matter a worthy target of our scarce resources.

The Commission's Analysis To Aid Public Comment discussed explicit and implicit    invitations to collude and placed the present situation in the latter category. I agree    with that categorization as far as it goes, since no one from Stone is alleged to have    contacted a competitor and baldly suggested a price increase or an output reduction (and    thus this case is not a replay of *American Airlines*). Instead, it is the totality    of Stone's *conduct* -- when judged against the backdrop of Stone's remarks    concerning low prices, excess capacity, and possible inventory overhang -- that has led    the Commission to conclude that Stone implicitly invited its competitors to collusively    raise prices.(2) I am unable to place on Stone's actions (and its    explanations of them) the sinister characterization that would permit me to condemn its    otherwise justifiable actions. I am concerned that the Commission's decision in this case    may deter corporate officials from making useful public statements (*e.g.*, in    speeches to investors or presentations to securities analysts) that candidly address    industry conditions, individual firms' financial situations, and other important subjects.

I respectfully dissent.

Endnotes

(1)In their Concurring Statement, my colleagues rely on the    Analysis To Aid Public Comment in this case for the proposition that "it would have    been more economical for Stone Container to keep its plants open than to purchase    inventory from competitors . . ." With all due respect, it is precisely the truth of    that assertion that I find insufficiently supported by the evidence.

(2)The Analysis To Aid Public Comment cited *Precision    Moulding Co., Inc.*, Docket No. C-3682, as an example of an implicit invitation to    collude. According to the Analysis, Precision Moulding "informed [its] competitor    that its prices were 'ridiculously low' and that the competitor did not have to 'give the    product away.'" I do not consider Stone's conduct and language to have communicated a    message nearly as pointed as that conveyed by Precision Moulding. |
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