The opinion of the court was delivered by: HENDERSON
This action arises out of a complaint filed by the government in January 1961, charging certain defendants with violations of the Sherman and Clayton Acts. The complaint charged that Greater Buffalo Press, Inc. (hereinafter Greater Buffalo) engaged in a conspiracy with the Hearst Corporation (hereinafter Hearst) and Newspaper Enterprise Association, Inc. (hereinafter NEA) to restrain interstate commerce in the sale of color comic supplements by refraining from soliciting printing business from each other's customers and by maintaining and stabilizing the price of color comic supplement printing in violation of section 1 of the Sherman Act. The complaint also charged the same defendants with engaging in a conspiracy to monopolize color comic supplements in violation of section 2 of the Sherman Act, and Greater Buffalo is charged with violation of section 7 of the Clayton Act (15 U.S.C. § 18) regarding its 1955 acquisition of the outstanding stock of defendant International Color Printing Corporation (hereinafter International), since it is alleged that the acquisition constitutes a substantial lessening of competition and tends to create a monopoly with regard to color comic printing in the United States. Lastly, the defendants Hearst and NEA were charged with violation of section 3 of the Clayton Act (15 U.S.C. § 14), for allegedly selling comic features to newspapers at discounts on the condition that the newspaper purchasers shall not deal in comic printing services sold by their competitors. The litigation arises out of a claim filed with the Department of Justice on behalf of Atlantic Features that King Features was combining the licensing of its copyrighted features with the sale of the printing of the color comics in violation of the antitrust law.
After the complaint was filed, the defendant Hearst entered into a consent decree with the Department of Justice which in effect withdrew the charges against Hearst and provided that King Features may continue to engage in the practice of combining the sale of features and printing until the court shall determine the antitrust issue as to Greater Buffalo. The decree also provided that Hearst shall obey the antitrust laws during the pendency of the action. No reason has ever been presented by the Department of Justice to explain the significant change of heart toward the defendant Hearst. Any attempt by the court to explain the conduct would be inappropriate in view of the court's lack of knowledge of the facts and circumstances surrounding that decision.
After the entry of the consent decree and prior to the taking of testimony, the government amended its original complaint by striking the allegation of monopoly against Greater Buffalo. There remain, therefore, conspiracy charges against NEA and Greater Buffalo under sections 1 and 2 of the Sherman Act, an alleged violation of section 7 against Greater Buffalo arising out of the International acquisition, and a violation of section 3 of the Clayton Act against NEA regarding tie-ins.
Greater Buffalo is a New York corporation with facilities in Buffalo and Batavia and is in the business of commercial printing, including color supplements and color comic supplements for insertion in newspapers, and is engaged in the production of goods for shipment in interstate commerce. Southwest Color Printing Corporation (hereinafter Southwest Color) is a Texas corporation, having its principal place of business in Lufkin, Texas. Dixie Color Printing Corporation (hereinafter Dixie Color) is an Alabama corporation with its principal place of business and facilities at Sylacauga, Alabama. Both Southwest Color and Dixie Color are wholly owned subsidiaries of Greater Buffalo.
International is a Pennsylvania corporation, having its principal place of business and facilities at Wilkes-Barre, Pennsylvania. Prior to June 1955, its sole business consisted of the printing of color comic supplements for the account of King Features Syndicate (hereinafter King), a division of Hearst. Greater Buffalo acquired all of the common capital stock on June 25, 1955, and since that time it has been engaged in the printing of color comic supplements for the account of King and both color comic supplements and commercial printing on contracts held by Greater Buffalo.
NEA is a Delaware corporation, with its principal place of business at Cleveland, Ohio, engaging in the business of licensing copyrighted newspaper features, including color comic features, to newspapers, and selling color comic supplement printing of copyrighted comic features to newspapers. Prior to 1955, NEA owned the stock of Buffalo Color Press, Inc. which owned and operated printing facilities in Buffalo, New York, and printed color comic supplements for NEA and one other newspaper. In 1955, its assets were sold to Greater Buffalo. Apart from its connection with Buffalo Color Press, NEA is not engaged in printing color comic supplements, but subcontracts such printing to other printers.
The Hearst Corporation is a Delaware Corporation with its principal place of business in the City of New York. It is engaged in the business of licensing copyrighted newspaper features, including color comic features, to newspapers through its New York division, King. It has also been engaged in the business of selling color comic supplement printing of copyrighted comic features to newspapers.
Color comic supplements are newsprint printed with colored ink containing reproductions of copyrighted color comic features, advertising material and other types of features. Each supplement page receives four impressions of ink which requires an exacting job of alignment and adjustment for each impression. A great deal of skill and expertise is necessary to be proficient in the printing of such supplements, and the higher the degree of skill, the finer the end product and more desirable the supplement in appearance and readability. Necessary to this process is the use of skilled personnel and stereotype equipment and other machinery.
Some newspapers print their own comic supplements. Many more are printed by color comic printing companies. The newspapers which do not print their own color comic supplements are capable of doing so but have found it to be to their economic advantage to purchase them. There is every reason to believe that if at any time the cost of purchasing such color comic supplements exceeds the cost to the newspaper of printing them, the newspapers will do the printing themselves.
There are, therefore, three ways which a newspaper can obtain color comic supplements ...