Electric Motor Division
The Electric Motor Division based its refusal to accept the last price reduction of the Monson Controls
Corporation on the premise that it was made as a last, desperate effort to continue supplying General
Appliance with this part (Monson Controls Corporation continued to supply General Appliance Corporation
with other products, although this control unit had been a major item). As support for this premise, the
Electric Motor Division indicated that at the lower price it would lose money. Since it was as efficient as
the Monson Controls Corporation, it concluded that Monson must also be losing money. The price was,
therefore, a distress price and not a valid basis for determining an internal price. To support its case further,
the Electric Motor Division pointed out the downward trend in the price of this part as evidence of distress
pricing practices growing out of the excess capacity in the industry.
The general manager of Electric Motor Division stated that it was going to take all his ability and
ingenuity to make a profit even at the $2.40 price. At $2.15, he could never be a profit position, and if
forced to accept a price of $2.15, he would immediately make plans to close the plant and let outside
suppliers furnish all the thermostatic control units.