Evening star., 1940-03-11
Antitrust Campaign
Is Extended 10 #
Hardboard Industry
Jackson Seeks to Test
Validity Of Sales
Agreement System

In q new move In its antitrust
drive on the kuilding industry, the
Justice Department today entered
suit in Federal Court for the South
ern District of New York against
10 companies which are alleged to
have monopolized trade in hard
board, composition board used in
interior construction work.
The Masonite Corp. and nine
other concerns are defendants in
the action which Attorney General
jackson describes as test of the
validity of the use of patent priv
ileges to circumvent antitrust
laws"
Announcement Of the suit, which
Is designed to break up the sales
agreements under which the hard
board is handled, was made yester-
day and brought declaration from
Ben Alexander, president of Ma
sonite, that if the Government is
successful the cost of the material
will be raised.
Masonite Holds Patents.
Hardboard, according to Mr.. jack
son, is produced under patents held
by the Masonite Corp. which manu-
factures 96.5 per cent of the annual
production of more than 200,000,O 900
square feet of the boards made
from wood or vegetable fiber.
The other companies, he contin-
ued, sell the Masonite Corps prod
uct under agency contracts which
permit Masonite to fix prices. These
other companies "are potential COM
petitors in the manufacture Of hard
board" he argued.
The department, Mr.. Jackson said,
is of the opinion that such con-
tracts are an unreasonable restraint
of trade, but mo case has yet been
presented to the courts which def
nitely establishes the illegality Of
such arrangements"
For that reason, he added, the de-
partment seeks "a clear declara-
ton" in equity proceedings. The suit
asks for cancellation of the agency
agreements.
IF the department is successful
in this suit, there should be con-
siderable reduction in price and
corresponding increase in sales of
hardboard," the department said in
q statement.
Says Contracts Upheld.
Mr.. Alexander, however, declared
that agency contracts similar to
those used by his company had been
recognized for 200 years and have
bene upheld by the Supreme Court.
IF We are required to do away
with the agency contracts" he added,
there are two alternatives.
I'VE could license other COM
panies to manufacture hardboards,
but obviously this would increase the
cost to the public, because with this
additional plant investment and
with production scattered among a
lot of small plants, production costs
would necessarily be higher. Or, we
could undertake to produce and sell
all the boards ourselves, but again
cost would be increased since we
would not be able to utilize the es-,
tablished sales facilities of other
companies"
The companies the department
said would be named in the suit
were Masonite Corp, Chicago and
Laurel, Miss; Celotex Corp, Chicago
and Marrero, La; Certain-Teed
Products Corp, New York; Johns
Manville Sales Corp, New York;
Insulite Co., Minneapolis; Flintkoke
Co., New York; National Gypsum
Co., Buffalo: Wood Conversion Co.,
Cloquet, Mimi; Armstrong Cork Co.,
Lancaster, Pa, and Dant & Russell,
Inc, Portland, Oreg.
Meanwhile, Senator Nye, Re-
publican, of North Dakota
said yesterday the Justice De-
partment had followed "a policy
of appeasement" toward firms ac-
cused of antitrust violations by
allowing the companies to agree in
civil proceedings to the imposition
of regulations rather than to press
prosecution.
He made public letter to Attor-
ney General Jackson in which
he said many have earnestly
hoped that, as you succeeded
to the high office of At
torney General" that policy would
be discontinued. The letter con-
tanned a series Of questions asking
Mr.. Jackson's views on consent de-
cree procedure.