Cereal Companies Move to Kill "Shared Monopoly" Antitrust Suit

Kellogg Co., General Mills Inc., and General Foods Corp - .the three largest cereal companies in the U.S.-are gaining increasing support in Congress for moves to delay or kill a nine-year-old antitrust suit against the three companies.

The Federal Trade Commission (FTC) brought the suit with the legally unprecedented charge of a "shared monopoly," that the three companies tacitly conspired to control cereal prices.

The FTC also charges that the cereal companies persuaded supermarkets to arrange shelves according to brand name instead of product, making comparison shopping difficult.

Pending in the House and in the Senate is a bill that would place a moratorium on decisions by the FTC in shared monopoly proceedings until Congress establishes the existence of the violation and defines its elements.

In addition, the House appropriations subcommittee voted on June 24 to suspend funding of the cereal case until alleged improper action by the FTC was investigated. The companies claim that the judge who had been hearing the case since 1972 has been wooed by the FTC to remain on the case, rather than retire.

A staff member of the House bill's sponsor, Rep. Howard Wolpe-who represents Kellogg's home base of Battle Creek, Michigan-said the FTC "is overstepping its authority" in raising the issue of a shared monopoly.

Federal Election Commission records show that in 1979 and 1980 Kellogg's Better Government Committee gave $3,500-its largest campaign contribution-to Wolpe's campaign.

The FTC has claimed this shared monopoly costs consumers $128 million a year, and the agency hoped to break the three cereal firms into five new companies. In addition, the FTC aimed to require "the big three" to license to other companies any new brands they develop within five years of their introduction.

Currently, Kellogg Co. controls 45%a of the $1.5 billion-a-year cereal market; General Mills claims 21%; and General Foods, 17%.