The Moving picture world (May 1923-June 1923)

May 12, 1923 MOVING PICTURE WORLD 11 Government Charges Eastman with Conspiracy CONSPIRACY, as a result of which the moving picture industry in the United States was virtually compelled to use Eastman Kodak Com: pany's film exclusively, is charged by the Federal Trade Commission in its long-expected formal complaint against that company and others who are declared to be parties to the alleged plot to keep foreign-made film off the American market. The commission names as respondents to its complaint the Eastman Kodak Com. pany, Rochester, N. Y. ; George Eastman, president, and Jules E. Brulatour, a distributor; the Allied Laboratories Association, Inc., New York City, and the following, members of the association : The Burton Holmes Lectures, Inc., Chicago; The . Craftsmen • Film Laboratory, Inc., .New York City ; Kineto Company of America, Inc., New York City ; Cromlow Film Laboratories, Inc., New York City ; Palisades Film Laboratories, Inc., Palisades, N. J.; Claremont Film Laboratory, Inc., New York City; Film Developing Corporation. New Yon . City ; Evans Film Manufacturing Company, Inc., New York City; Republic Laboratories, Inc., New York City ; Lyman E. Howe Film Company, Wilkes-Barre, Pa.; Rex Laboratory, Inc., Cliffside, N. J. ; Tremont Film Laboratories, Inc., New York City; Mark Dintenfass, Hudson Heights, N. J., and the Erbograph Company, New York City. The specific charge against the respondents is conspiracy which resulted in the Eastman Company acquiring a virtual monopoly in the manufacture and sale oi cinematograph film in the United States. It is charged that competition in the manufacture and sale of prints of motion picture film has been hindered and in some instances eliminated, and that prices of positive prints sold to producers of motion pictures through the country have been fixed and standardized. In identifying the respondents, the commission declares the Eastman Kodak Company to be the largest manufacturer of cinematograph film in the world, and up to March, 1920, that company manufactured and sold approximately 94 per cent, of all the cinematograph film used in the United States, and manufactured and sold approximately 96 per cent, of all the cinematograph film produced in this country. Between March, 1920, and September, 1921, due to competition by American importers of cinematograph film manufactured in foreign countries, the sales by the Eastman Kodak Company decreased to approximately 81 per cent, of the total sales in the United States. Jules E. Brulatour is declared to be engaged in New York City in purchasing film from the Eastman Company and reselling ft throughout the United States. At the time the statistics were gathered by the commission, March, 1920, Brulatour, it is declared, purchased approximately 81 per cent, of the cinematograph film sold by the Eastman Company in the United States. The complaint identifies the Allied Laboratories Association, Inc., as a non-trading corporation, organized under the laws of New York, its membership being limited to persons, firms and corporations engaged in manufacturing and selling prints of motion pictures. The members of the association operate manufacturing laboratories in which they manufacture positive prints from motion picture negatives. The unfair methods of competition specifically complained of by the Federal Trade Commission, which are declared to be in violation of the Federal Trade Commission Act, are summarized as follows: It is charged that the Eastman Company and its president, George Eastman, during 1919 induced the respondent, Jules E. Brulatour, to construct two manufacturing laboratories for manufacturing positive prints, one known as the G. M. Laboratories, Long Island City, and the other known as the San-Jacq Laboratories, at Ft. Lee, N. J. These two laboratories, together with a third laboratory, known as Paragon, Inc., Ft. Lee, N. J., were then operated by respondent, Brulatour, at the direction of the Eastman Company as separate and distinct enterprises, without disclosing their true ownership. In the operation of these laboratories respondent Brulatour, it is charged, supplied to various producers of motion pictures positive prints at prices far below tho.se at which competitive manufacturing laboratories could supply such prints. In supplying competitors of the Eastman Company with cinematograph film it is charged that the Eastman Company caused the respondent Brulatour to delay deliveries of film, and, in some instances, to shut off the supply of these competing manufacturing laboratories, -it is also charged that the Eastman Company caused respondent Ohio Movies Must Close on Sundays The Ohio Supreme Court at Columbus, Ohio, has handed down a decision that a moving picture is virtually the same as a theatrical performance, especially in so far as the Ohio Sunday closing laws are concerned. This decision affirms the ruling of the Hancock County Appellate Court at Findlay, Ohio, from which Manager Walter K. Richards appealed after having been indicted for operating his movie theatre on the Sabbath, his appeal having alleged that a picture exhibition does not come within the classification of a theatrical or dramatic performance and is not, therefore, in violation of the Ohio statutes covering Sunday closing. Findlay managers have now agreed that they will positively close on Sunday hereafter, but are awaiting with interest the action of the next grand jury in cases from the mayor's court against Sunday violators in other lines of business, against whom the managers have filed charges in retaliation for their efforts to keep the movies closed on Sundays. Brulatour to discriminate as between thos laboratories who confined their purchases t the Eastman Company and those labora tories which purchase film of other man facturers. This was done by extending t the customers of the Eastman long terms c credit, which was denied to the others. Th purpose, it is alleged, was to coerce the vari ous competing laboratories not controlled b the respondents into confining their pur chases to cinematograph film manufacture by Eastman. Subsequently, in 1921, it is charged, th Eastman Company caused the three labora tories mentioned above to be transferre and assigned to the Eastman Company, an' immediately thereafter publicly announce' to the trade the purchase of these labora tories, which it already owned, and that i intended to operate the same. This wa; done, it is alleged, for the purpose o coercing competing manufacturing labora tories to refrain from making further pur chases of cinematograph film manufacture! by others than the Eastman Company. The threat, by Eastman to operate th< three manufacturing laboratories abov< named, it is charged, induced and coercec the respondent Allied Laboratories Associ ation, Inc., and its members to join wit! Eastman and Brulatour in the conspirac; with the result that in September, 1921, at agreement was reached whereby the East man Company agreed to close the threi manufacturing laboratories in consideratioi of which the Association members agreed t< confine their purchases of cinematograpl film to film manufactured in the Unitec States, and to refuse to purchase any cinematograph film from American importers o1 foreign made film. It was understood, the complaint recites, that the Eastman Company would keep its three manufacturing laboratories in working order and would reopen and operate such laboratories in competition with the Association members should any of the members again purchase or use in their plants cinematograph films imported from foreign countries. By reason of this agreement, the complaint states, the Association and its members have confined their purchases of cinematograph film to film manufactured by the Eastman Company and have exploited the fact that no other film is used in their laboratories. A further charge is made that various members of the Association have falsely announced to the trade from time to time that cinematograph film produced by competitors of the Eastman Company could not be used to good advantage. The further statement is made in the complaint that members of the Association have consistently sought to coerce outside manufacturing laboratories to become members of the Association and to agree to purchase cine-! matograph film from the Eastman Company and to refuse to purchase from the Eastmanj. Company's competitors. The respondents in the case have been given a period of thirty days in which to file with the commission written answer to the charges contained in the complaint, following which a date will be set for a hearing. The announcement by the commission that the investigation of the film industry was to be made was a surprise to the moving picture world, in which rumors have been circulating for many months that the government was very interested in the steps which were alleged to have been taken by the Eastman Kodak Company to bar out foreign films from this market.