Document: 393 U.S. 223 89 S.Ct. 429 21 L.Ed.2d 394 FEDERAL TRADE COMMISSION, Petitioner,v.TEXACO, INC., et al. No. 24. Argued Nov. 13, 1968. Decided Dec. 16, Daniel M. Friedman, Washington, D.C., for petitioner. Milton Handler and Edgar E. Barton, New York City, respondents. Mr. Justice BLACK delivered the opinion of Court. 1 The question presented by this case is whether FTC was warranted in finding that it an unfair method competition violation § 5 Federal Trade Commission Act, 38 Stat. 719, as amended, 15 U.S.C. 45, respondent Texaco to undertake induce its service station dealers purchase Goodrich tires, batteries, accessories (hereafter referred TBA) return a commission paid Texaco. In three related proceedings instituted 1961, challenged sales-commission distributing TBA each named major oil company tire manufacturer. After extensive hearings, concluded arrangements constituted ordered refrain from entering into any such arrangements. one these cases, Atlantic Refining Co. v. FTC, 381 357, 85 1498, 14 443 (1965), Court affirmed decision Appeals Seventh Circuit sustaining Commission's order against Company Goodyear Tire & Rubber Company. second case, Shell Oil 360 F.2d 470, cert. denied, 385 1002, 87 705, 17 541, Fifth Circuit, following Court's Atlantic, sustained Firestone Rubber, contrast decisions two Courts Appeals, District Columbia set aside this, third involving respondents 118 U.S.App.D.C. 366, 336 754 (1964).1 petitioned review and, week our decision, we granted certiorari remanded further consideration light opinion. 739, 1798, 714 (1965). Commission, on remand, reaffirmed conclusion Texaco-Goodrich arrangement, like involved other violated Act. again reversed, time holding had failed establish exercised dominant economic power over or arrangement adverse effect competition. 127 349, 383 942. We determine court below correctly applied principles decision. 390 979, 88 1100, 19 1275. 2 Congress enacted Act combat their incipiency trade practices exhibit strong potential stifling large measure task defining 'unfair methods competition' left Commission. legislative history shows best check would be 'an administrative body practical men * who will able apply rule particular business situations, so eradicate evils with least risk interfering legitimate operations.' H.R. Conf.Rep. 1142, 63d Cong., 2d Sess., 19. 367, 1505, 443. While ultimate responsibility construction statute rests courts, have held many occasions determinations expert charged application statute, are entitled great weight. Motion Picture Advertising Serv. Co., 344 392, 396, 73 361, 364, 97 L.Ed. 426 (1953); Cement Institute, 333 683, 720, 68 793, 812, 92 1010 (1948). This especially true here, where has occasion study assess effects marketing TBA. With mind, turn facts case. 3 agree fall under rationale if correct conclusions (1) dealers; (2) exercises fulfilling agreement promote sponsor products; (3) anticompetitive result exercise power. 4 That holds clearly shown record fact, do not contest 'inherent structure economics petroleum distribution system.' 353, 942, 946; 481 (C.A. 5th Cir.). Nearly 40% lease stations These typically hold one-year stations, leases subject termination at end year 10 days' notice. At during man's his may immediately terminated without advance notice Texaco's judgment 'housekeeping' provisions lease, relating use appearance station, fulfilled. contract which receive vital supply gasoline products also runs terminable 30 standard form contract. average dealer man limited means what him sizable investment station. He stands lose much he incurs ill As Judge Wisdom wrote Shell, 'A operating gas bound overawed corporation supplier, banker, landlord.' 487. It background must viewed. provides pay 10% all purchases retail return, agrees 'promote sale products' dealers. During five-year period studied (1952—1956) $245,000,000 sponsored purchased dealers, received almost $22,000,000 wholesale commissions. Evidence before showed carried out through constantly reminding desire they stock sell emphasizes importance recommended brands early initial interview prospective repeats recommendation steady flow compaign materials utilizing products. salesmen, primary link between day-to-day contact evaluation dealer's salesman often important factor determining renewed. Thus whose favorably every dealer, key promption products, accompany salesmen calls Finally, receives regular reports amount dealer. Respondents contend, however, used only maintaining accounts policing purchases. 6 urge fundamentally different those because presence there, absence 'overt coercive practices' designed force brand agree, Government concedes, evidence regarding considerably less substantial than atlantic. contained direct threatened cancellation leases, setting quotas certain amounts TBA, requirement single assigned points, refusals honor credit card charges nonsponsored 'phantom inspectors.' present fails kind overt acts think clear nonetheless manner tended foreclose system inherently coercive. A very livelihood depends upon continuing good favor aware company's Through constant reminder salesman, demonstration projects promotional materials, contacts Texaco, learns lesson wants pays item buys. gasoline, identification review, flies face common sense say, asserts, 'perfectly free' reject chosen Equally applicable here '(i)t difficult escape there been little point paying commissions companies were ability exert wholesalers dealers.' U.S., 376, S.Ct., 1509. 7 similarly convinced Service play increasingly role automotive accessories. five supplying virtually tires come new cars, replacement market can smaller hope compete. Ideally, most favored customers price quality. To extent induced t select maintain dependent, operation competitive adversely affected. noted essential vice 'the utilization curtail another.' 369, 1506. Here manufacturer partial substitute merit gaining share market.2 compete even terms quality competition; overcome, addition, influence buy brand. success foreclosing competitors matched coercion employed feel tendencies clear, properly halting practice incipiency. required show condemns totally eliminated relevant market. enough found unfairly burdened insignificant valume commerce. International Salt United States, 332 12, 20 (1947); States Loew's, Inc., 371 38, n. 4, 83 97, 102, 9 11 (1962); 371, 1507, 8 justified concluding more insubstantial commerce involved. Nation's largest companies. sells approximately 30,000 about 16.5% States. volume 1952—1956 $245,000,000, times For reasons stated above, reverse remand enforcement exception paragraphs six does contest. Reversed remanded. HARLAN, concurring. 12 I join opinion, statement. my action joining today's inconsistent brother Setwart's dissent 377, 1510, candor compels me say reflection portions today sustains within authority 13 STEWART, dissenting. told '(t)he covercive.' If so, then went deal unnecessary trouble 368, 1506, 443, 'not exerted persuasion natural incident power, but coupled threats reprisal *.' acknowledges Atlantic.' But understatement. fact unable 'find controlling compel TBA.' 356, 949. why perforce create per se 'inherent' coercion. some length separate supra, 1510. cannot rule. Accordingly, affirm Appeals. action. action, since already final prohibiting plan company. See 474 (C.A.5th Cir.), 541. plan, make choice solely basis bolstered testimony 31 sellers competing, dealers' concern disapprove

Category: 7