Source: https://openjurist.org/384/us/316
Timestamp: 2019-04-19 20:24:22+00:00

Document:
Ralph S. Spritzer, Washington, D.C., for petitioner.
Robert H. McRoberts, St. Louis, Mo., for respondent.
Brown's answer further admitted that the operators of 'such Brown Franchise Stores in individually varying degrees accept the benefits and perform the obligations contained in such franchise agreements or implicit in such Program,' and that Brown refuses to grant these benefits 'to dealers who are dropped or voluntarily withdraw from the Brown Franchise Program * * *.' The foregoing admissions of Brown as to the existence and operation of the franchise program were buttressed by many separate detailed fact findings of a trial examiner, one of which findings was that the franchise program effectively foreclosed Brown's competitors from selling to a substantial number of retail shoe dealers.2 Based on these findings and on Brown's admissions the Commission concluded that the restrictive contract program was an unfair method of competition within the meaning of § 5 and ordered Brown to cease and desist from its use.
'By passage of the Federal Trade Commission Act, particularly § 5 thereof, we do not believe that Congress meant to prohibit or limit sales programs such as Brown Shoe engaged in in this case. * * * The custom of giving free service to those who will buy their shoes is widespread, and we cannot agree with the Commission that it is an unfair method of competition in commerce.' 339 F.2d 45, 56.
In addition the Court of Appeals held that there was a 'complete failure to prove an exclusive dealing agreement which might be held violative of § 5 of the Act.' We are asked to treat this general conclusion as though the court intended it to be a rejection of the Commission's findings of fact. We cannot do this. Neither this statement of the court nor any other statement in the opinion indicates a purpose to hold that the evidence failed to show an agreement between Brown and more than 650 franchised dealers which restrained the dealers from buying competing lines of shoes from Brown's competitors. Indeed, in view of the crucial admissions in Brown's formal answer to the complaint we cannot attribute to the Court of Appeals a purpose to set aside the Commission's findings that these restrictive agreements existed and that Brown and most of the franchised dealers in varying degrees lived up to their obligations. Thus the question we have for decision is whether the Federal Trade Commission can declare it to be an unfair practice for Brown, the second largest manufacturer of shoes in the Nation, to pay a valuable consideration to hundreds of retail shoe purchasers in order to secure a contractual promise from them that they will deal primarily with Brown and will not purchase conflicting lines of shoes from Brown's competitors. We hold that the Commission has power to find, on the record here, such an anticompetitive practice unfair, subject of course to judicial review. See Atlantic Rfg. Co. v. FTC, 381 U.S. 357, 367, 85 S.Ct. 1498, 1505, 14 L.Ed.2d 443.
We hold that the Commission acted well within its authority in declaring the Brown franchise program unfair whether it was completely full blown or not.
38 Stat. 719, as amended, 15 U.S.C. § 45(a)(6) (1964 ed.).
In its opinion the Commission found that the services provided by Brown in its franchise program were the 'prime motivation' for dealers to join and remain in the program; that the program resulted in franchised stores purchasing 75% of their total shoe requirements from Brown—the remainder being for the most part shoes which were not 'conflicting' lines, as provided by the agreement; that the effect of the plan was to foreclose retail outlets to Brown's competitors, particularly small manufacturers; and that enforcement of the plan was effected by teams of field men who called upon the shoe stores, urged the elimination of other manufacturers' conflicting lines and reported deviations to Brown who then cancelled under a provision of the agreement. Compare Brown Shoe Co. v. United States, 370 U.S. 294, 296, 82 S.Ct. 1502, 1508, 8 L.Ed.2d 510.
See, e.g., Federal Trade Comm'n v. R. F. Keppel & Bro., Inc., 291 U.S. 304, 310, 54 S.Ct. 423, 425, 78 L.Ed. 814; Federal Trade Comm'n v. Cement Institute, 333 U.S. 683, 693, 68 S.Ct. 793, 799, 92 L.Ed. 1010; Atlantic Rfg. Co. v. FTC, 381 U.S. 357, 367, 85 S.Ct. 1498, 1505, 14 L.Ed.2d 443.
See, e.g., Fashion Originators' Guild of America v. Federal Trade Comm'n, 312 U.S. 457, 463, 61 S.Ct. 703, 706, 85 L.Ed. 949; Atlantic Rfg. Co. v. FTC, 381 U.S. 357, 369, 85 S.Ct. 1498, 1506.
See cases cited in note 4, supra.

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