Corporations – Clayton Act – Service of Process on Alien Corporations Through Their Local Subsidiaries

Two affiliated German corporations, one of which is the defendant, established a jointly owned subsidiary in New York. Three members of the subsidiary’s five-man board of directors are officers or directors of the German parents, while a fourth is a former employee sent to this country to manage the subsidiary. The American company is devoted exclusively to the business of the German parents. It assists in the negotiation of contracts, although it has no power to bind the parents, advises with respect to patents, and makes infrequent sales and purchases. For these services, it receives a flat fee plus a five percent price differential on the sales and purchases made for the parents. Although the subsidiary’s officers have appreciable freedom in day-to-day action, any expenditure which will increase its budget must be approved by the parent corporations. A subpoena, addressed to defendant in connection with a grand jury investigation of possible antitrust violations, was served on the assistant treasurer of the American subsidiary. On defendant’s motion to quash service, held, denied. The subsidiary is the alter ego of the German parents; therefore, defendant is “found” in this country within section 12 of the Clayton Act. In re Siemens & Halske A. G., Berlin, Germany, (S.D. N.Y. 1957) 155 F. Supp. 897.