Evening star., 1951-11-08
ki|kConspiiracy
VerdictUpsetby
Appeals Ruling
District Court Directed
To Acquit Producers
In Price-Fixine Case

The United States Court OF APP
peals today reversed the restraint
of-trade conspiracy conviction Of
the Maryland and Virginia Milk
Producers Association, Inc, and
its secretary treasurer, Bruce B.
Derrick.
At the same time, the appellate
court, in its two-to-one decision,
ordered District Court to find the
defendants not guilty of the
|charge.
Originally, seven Washington
area dairieS, as we'll as the asso-
Iciation and Mr.. Derrick, were in
dicted on charges of fixing milk /.
prices and suppressing competi-
ton in the industry here. Only
two of the indicted dairies-Safe-
way and Richfield-were con-
victed by District Court Judge
Alexander Holtzoff. The dairies
appealed their fines of S10O each
but later withdrew the appeals.
The association had been fined
$500 and Mr.. Derrick S10O. Mr..
Derrick's fine was suspended,
however.
Find Case Not Proved.
The indictment charged that
the defendants. from about 1880
ITO 1948. wrongfully conspired to
eliminate competition in milk
sales by agreeing among them
selves to fix the prices of three
categories of milk. This was done,
the Government charged, after
the association entered into con-
tracts with the milk distributors.
The association. cooperative
of 1,500 milk producers. furnished
80 per cent of the Washington
area supply during the period
covered by the indictment.
The contracts to which the Gov
eminent objected created a rigid
and artificial pricing structure :.
without regard for the normal
forces of competition, in violation
iof the Sherman Antitrust Act,
Federal counsel charged.
The appellate court majority,
Judges Wilbur K. Miller and Ben
|; nett Champ Clark. ruled, however.
that the Government had failed
to prove its case.
Il Prices Set by Association.
| Prosecution witnesses, Judge
, Miller wrote, testified that the
prices to be paid to the associa-
tion by Safeway and Richfield
l''were not fixed by point action of
{ the four convicted defendants, but
were decided upon by the associa-
ton and imposed upon the dairies.
Thus, the prosecutions own
> proof refuted the charge that the
Appellants and those two dairies
.lconsl.ced to and did fix wholesale
prices. With commendable can
dor, the Government comedies in
tits brief that the association alone
determined wholesale prices"
J, Judge Miller further pointed out
!, that prosecution testimony showed
, the association had nothing to do
with fixing retail milk prices
either.
Those prices" the judge noted,
ARE not always uniform. In fact,
we were told in argument that
Safeway sells milk for 2 cents per
quart less than Richfield charges"
i Contract Not Exclusive.
Judge Miller pointed out that
the association was required to
fill the distributors needs to the
extent of its ability to do so. If
the association had not been able
to meet the dairies' needs, the dis
tributors could have sought their
supply elsewhere, it was explained.
Thus, the contracts were not
exclusive to the extent of alto
gether prohibiting purchases from
outside sources" the majority
held.
AS for Mr.. Derrick. the appellate
majority ruled that the mere fact
, he has signed contracts with Safe
way and Richfield for the associa-
, ton was not enough to sustain his
. conviction. because the contracts
/ were admittedly legal under an
Agriculture Department order in
. effect at the time.
Judge Fahy Disagrees.
Dissenting, Judge Charles Fahy
favored affirmation of the District
court convictions, chiefly on the
Igrounds that there was a con-
lcert" between the association and
distributors and among the dis
ltributors themselves. AS a result,
the price of one class of milk was
higher than the price charged for
a similar grade of milk used for
other purposes, Judge Fahy de-
,lclared. adding,
i Price fixing is illegal of itself
because its necessary effect is to
RESTRAIN trade or commerce by
substituting agreement upon price
/. flor competition and economic fac
> torS Sllnh oS Silrr,1v opd Ior,,opJ