The Match Game

This week the finger of justice was leveled once more at long-dead Ivar Kreuger. He was named, dead or alive, as a coconspirator in an antitrust complaint filed by the U.S. Department of Justice against 18 match corporations and match kings.

The naming of Swedish Match King Kreuger was historically appropriate. But it was more appropriate that the No. 1 corporate defendant should be the U.S.'s Diamond Match Co., and that the first individual named was Diamond's secretive, 67-year-old engineer president, William Armstrong Fairburn. Match King Fairburn, who works most of the time at his secluded, tree-hedged ranch in California's Ojai Valley and rarely appears in Diamond's discreet Manhattan offices, has run Diamond like a Central American dictator since 1910, when he was called in to figure out how to make matches without poisoning match workers.

Ivar Kreuger, who shot himself in his Paris apartment twelve years ago, was second to no man in his ability to parlay a bunch of match companies into an international stockmarket bubble. But Fairburn, a slower, solider worker, was the man who could almost always beat Kreuger at the match game--at least in the U.S. market, which is all that Mr. Fairburn ever cared much about. In sundry Kreuger forays into Diamond's bailiwick, Fairburn had a way of selling him U.S. match interests at a fancy price, but ending up with Diamond still in the saddle.

Justice v. Diamond. Besides Fairburn and five other match kings, this week's antitrust action named the five top U.S. match producers (starting with Diamond and all allegedly controlled by it) who account for 83% of all U.S. production, plus two British, one Canadian, and three Swedish companies. This cartel, charged Justice, controls some 75% of the world's match business (the Japanese* and the Russians handle most of the rest). Its members have divided up the world among themselves and, except in rare spasms of greed, scrupulously refrain from trespassing on each other's preserves.

Some highlights in the complaint:

Diamond deals with Germany's I. G. Farbenindustrie left the U.S. almost barren of chlorate of potash capacity, an essential not only of match making but of ammunition, when war broke out.

As a favor to Swedish Match, Diamond refused to sell match-starved Latin America either match machinery (of which Diamond has a U.S. monopoly) or matches under the U.S. label.

A European-invented "repeating or everlasting match" -- a pencil-size gadget that ignites on scratching, can be blown out and relit up to 140 times in a row -- was suppressed. Diamond was glad to help keep it off the market because, as Justice quotes from Diamond files, it: 1) was "a distinct danger to the American match industry"; 2) "would be a fertile field for the rottenest kind of competition."

So What?

All this made a hair-raising case history of what a cartel can do to restrain competition. But though Justice drew an ugly picture, it conceded that the world's total match business amounts to a mere $95,000,000 a year--less than the turnover of a single middling-sized unit of the U.S. steel industry. And the trust busters are apt to have a hard time getting the U.S. consumer excited about lack of competition in the sale of a product he is accustomed to get for nothing.

* Some time ago the Japs gave the cartel a lot of trouble: they solemnly renamed a Japanese town "Sweden," flooded the U.S. with "made-in-Sweden" matches.

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