Box Makers Indicted

Corn flakes and chocolate candy, liquor bottles and laundry detergent: all these products and many more are sold in folding paperboard cartons. Now the Government is saying that for about 14 years the prices of these containers --and by extension the total prices of products that come in them--were kept higher than they should have been. Last week a federal grand jury in Chicago indicted 23 corporations and 50 present and former executives of 19 of those companies for conspiring to fix prices in the folding-carton industry.

Such containers amount to a $ 1.4 billion annual business in the U.S., and the accused firms account for about 70% of the industry's total volume. Included in the indictment are the nation's three largest folding-box producers: Container Corp. of America, Federal Paper Board Co. and American Can Co. Also mentioned in the indictment are unnamed, unindicted co-conspirators --undoubtedly companies that cooperated with the Justice Department's investigation. That suggests a Government belief that price fixing extended not just to 70% of box sales, but also to almost the industry's total volume. In terms of annual sales, the carton case is the Justice Department's largest price-fixing indictment since 1964, when eight defendants were accused of collusion in the sheet-steel industry.

According to the indictment, the defendants agreed among themselves not to offer lower bids to each other's established customers and to set uniform prices to customers served by more than one manufacturer; they also promulgated list prices, to which everyone adhered, for certain types of cartons. The Government claims that such behavior began in 1960, and ended some time before December 1974. That month the antitrust law was changed to make price fixing a felony punishable by fines on corporations of up to $1 million.

Jail Ahead? As it is, the accused corporations and individuals face maximum fines of $50,000 each; if convicted, the executives could go to jail for up to a year. The Justice Department also filed a civil suit against the 22 corporate defendants that still are operating independently (one has been merged). The suit seeks a court-ordered ban on price fixing of boxes and any other products that the companies make.

At week's end few of the defendants were prepared to comment publicly. A spokesman for Champion International Corp. said the company was "surprised" to be named, and the general counsel of Container Corp. issued a statement insisting that his firm had complied with the latest nuances of antitrust law. Privately, some industry officials grumbled that the indictment was politically motivated, to project an image of consumer protection in a presidential election year.

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