Synthetic resins and their raw materials / A survey of the types and uses of synthetic resins, the organization of the industry, and the trade in resins and raw materials, with particular references to factors essential to tariff consideration. Under the general provisions of section 332, title III, part II, Tariff act of 1930.

by United States Tariff Commission

Horizontal relationships between resin producers.

Horizontal relationships between companies are those between different units in the same industry (say two tar-acid resin producers), or in different industries each operating at the same stage of industrial production (say a tar-acid resin producer and a producer of urea resin). As a rule, extensive horizontal relationships are not common in relatively young industries, and this is true of the production of synthetic resins. In general, it has not been necessary to absorb competitors to achieve a greater volume of sales, and efforts have been directed to exploiting the possibilities of expansion in a growing market. This necessitated solving technical problems concerning improvement of the product and its production on an ever larger scale; legal problems regarding patents (protection of those owned, and the policy to be adopted toward unadjudicated patents owned by others); and the marketing problem of convincing prospective customers of the worth of a new product. These and other problems incidental to successful competitive production and sale of a given type of synthetic resin have been sufficient to restrain the desire to produce more than one type.

The patent situation of most synthetic resins is extremely complicated. In the case of tar-acid molding resins the basic Baekeland patents have expired, but for other synthetic resins either the basic patent is still in force, or it is difficult to say which is the basic patent, because of lack of adjudication by the courts. In all cases dozens of supplementary patents are in force and sometimes hundreds. As a result the patent situation, though one of the bars against entering into a new field, frequently forces some relationship between producing units in the same synthetic resin field. Cast phenolic resins afford an example of patent-licensing of several corporations by another with the payment of royalties as compensation. In a number of other branches of the resin industry, such as the laminated tar-acid resins and the alkyd resins, the mutual desire of producers to avoid litigation has apparently resulted in “gentlemen’s agreements” not to sue.