Opinion ID: 414319
Heading Depth: 3
Heading Rank: 2

Heading: The refusal to compete

Text: 13 The refusal of the defendants to compete for timber sales offered by the USFS or logs marketed by independent loggers was part of a general scheme to reduce the costs of timber acquisition and thereby increase the spread between costs to the defendants and the prices received for end products. This refusal to compete continued from 1959-1975 despite a chronic shortage of timber that persisted throughout that entire period. 14 The illicit relationship between the defendants dates from the earliest years of their joint presence in Alaska. As early as March 6, 1959, shortly after ALP's establishment of a mill in the Tongass National Forest, A.M. Brooks, KPC's timber manager, sent a letter to Archie Byers, his counterpart at ALP, disclosing information on log prices and log purchase agreements. In that letter, Brooks urged Byers to keep the information strictly confidential. 15 By 1969, the defendants had created a geographic border dividing the Tongass National Forest into spheres of influence. In an April 7, 1969, letter to Brooks, George A. Schmidbauer, the general manager of the Crawford Division of Georgia-Pacific Corporation, KPC's parent corporation, wrote that KPC should bid sales out of [the] K.P.C. area where A.L.P. has dropped out of active bidding. 16 A 1974 KPC memorandum labeled CONFIDENTIAL constitutes irrefutable evidence of a geographical market division. In that memo, D.L. Finney, Brooks' successor at KPC, notes that it would be most beneficial to ALP and ourselves to realign the operations so that KPC had the West Coast. The document discusses the benefits to each defendant of a geographic redistricting and proposes an exchange of certain areas. The memorandum concludes: 17 I cannot stress too hard, my feeling about the beenfits (sic) of towing, administration and log transfers and sorting if we can get the best geographical division between ALP and ourselves. It would also strengthen both of us in a competitive position for any outside interest (U.S. Ply or whoever) who tries to compete for sales with us at a later date. 18 This division of the market, sustained by an uninterrupted pattern of communications up through 1975, resulted in a remarkable record of bidding restraint by the de fendants. From 1959 1975, ALP and KPC, the two giants of the southeast Alaska lumber industry, bid against each other only three times out of 143 sales by the USFS. 4 19