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Matched Legal Cases: ['§ 5', '§ 1', '§ 1', '§ 5', '§ 5', '§ 1', '§ 2', '§ 2', '§ 2', '§ 7', '§ 47', '§ 5', '§ 2']

FTC V. CEMENT INSTITUTE, 333 U. S. 683 - Volume 333 - 1948 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 333 > FTC V. CEMENT INSTITUTE, 333 U. S. 683 (1948) > Full Text
1. The Commission has jurisdiction to conclude that conduct tending to restrain trade is an unfair method of competition violative of § 5 of the Federal Trade Commission Act, even though the self-same conduct may also violate the Sherman Act. Pp. 333 U. S. 689-693.
A cease and desist order issued by the Federal Trade Commission in proceedings against respondents under the Federal Trade Commission Act and the amended Clayton Act was set aside by the Circuit Court of Appeals. 157 F.2d 533. This Court granted certiorari. 330 U.S. 815816. Reversed, p. 333 U. S. 730.
We granted certiorari to review the decree of the Circuit Court of Appeals which, with one judge dissenting, vacated and set aside a cease and desist order issued by the Federal Trade Commission against the respondents. 157 F.2d 533. Those respondents are: The Cement Institute, an unincorporated trade association composed of 74 corporations [Footnote 1] which manufacture, sell and distribute cement; the 74 corporate members of the Institute; [Footnote 2] and 21 individuals who are associated with the Institute. It took three years for a trial examiner to hear the evidence, which consists of about 49,000 pages of oral testimony and 50,000 pages of exhibits. Even the findings and conclusions of the Commission cover 176 pages. The briefs, with accompanying appendixes submitted by the parties, contain more than 4,000 pages. The legal questions raised by the Commission and by the different respondents
Id. at 257 U. S. 454. The Court, in holding that the scheme before it constituted an unfair method of competition, noted that
the conduct in question was practically identical with that previously declared unlawful in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373, and United States v. Schrader's Son, Inc., 252 U. S. 85, the latter a suit brought under § 1 of the Sherman Act. Again, in 1926, this Court sustained a Commission "unfair method of competition" order against defendants who had engaged in a price-fixing combination, a plain violation of § 1 of the Sherman Act. Federal Trade Commission v. Pacific States Paper Trade Assn., 273 U. S. 52. In 1941, we reiterated that certain conduct of a combination found to conflict with the policy of the Sherman Act could be suppressed by the Commission as an unfair method of competition. Fashion Originators' Guild v. Federal Trade Commission, 312 U. S. 457, 312 U. S. 465. The Commission's order was sustained in the Fashion Originators' case not only because the prohibited conduct violated the Clayton Act, but also because the Commission's findings brought the "combination in its entirety well within the inhibition of the policies declared by the Sherman Act itself." In other cases, this Court has pointed out many reasons which support interpretation of the language "unfair methods of competition" in § 5 of the Federal Trade Commission Act as including violations of the Sherman Act. [Footnote 3] Thus it appears that, soon after its creation, the Commission began to interpret the prohibitions of § 5 as including those restraints of trade which also were outlawed by the Sherman Act, [Footnote 4] and
We find nothing to justify a holding that the filing of a Sherman Act suit by the Attorney General requires the termination of these Federal Trade Commission proceedings. In the first place, although all conduct violative of the Sherman Act may likewise come within the unfair trade practice prohibitions of the Trade Commission Act, the converse is not necessarily true. It has long been recognized that there are many unfair methods of competition that do not assume the proportions of Sherman Act violations. Federal Trade Commission v. R. F. Keppel & Bro., 291 U. S. 304; Federal Trade Commission v. Gratz, 253 U. S. 421, 253 U. S. 427. Hence, a conclusion that respondents' conduct constituted an unfair method of competition does not necessarily mean that their same activities would also be found to violate § 1 of the Sherman Act. In the second place, the fact that the same conduct may constitute a violation of both acts in nowise requires us to dismiss this Commission proceeding. Just as the Sherman Act itself permits the Attorney General to bring simultaneous civil and criminal suits against a defendant based on the same misconduct, so the Sherman Act and the Trade Commission Act provide the Government with cumulative remedies against activity detrimental to competition. Both the legislative history of the Trade Commission Act and its specific language indicate a congressional
The best known early example of a basing point price system was called "Pittsburgh plus." It related to the price of steel. The Pittsburgh price was the base price, Pittsburgh being therefore called a price basing point. In order for the system to work, sales had to be made only at delivered prices. Under this system, the delivered price of steel from anywhere in the United States to a point of delivery anywhere in the United States was, in general, the Pittsburgh price plus the railroad freight rate from Pittsburgh to the point of delivery. [Footnote 8] Take Chicago, Illinois, as an illustration of the operation and consequences
of the delivered price on all sales not governed by a basing point actually located at the seller's mill. [Footnote 9] And all sellers quote identical delivered prices in any given locality regardless of their different costs of production and their different freight expenses. Thus, the multiple and single systems function in the same general manner, and produce the same consequences -- identity of prices and diversity of net returns. [Footnote 10] Such differences
Moreover, Marquette's position, if sustained, would to a large extent defeat the congressional purposes which prompted passage of the Trade Commission Act. Had the entire membership of the Commission disqualified in the proceedings against these respondents, this complaint could not have been acted upon by the Commission or by any other government agency. Congress has provided for no such contingency. It has not directed that the Commission disqualify itself under any circumstances, has not provided for substitute commissioners should any of its members disqualify, and has not authorized any other government agency to hold hearings, make findings, and issue cease and desist orders in proceedings against unfair trade practices. [Footnote 11] Yet, if Marquette is right, the Commission, by making studies and filing reports in obedience to congressional command, completely immunized the practices investigated, even though they are "unfair," from any cease and desist order by the Commission or any other governmental agency.
Id. at 268 U. S. 606. In the Old Cement case and in Maple Flooring Mfrs.' Assn. v. United States, 268 U. S. 563, decided the same day, the Court's attention was focused on the rights of a trade association, despite the Sherman Act, openly to gather and disseminate statistics and information as to production costs, output, past prices, merchandise on hand, specific job contracts, freight rates, etc., so long as the Association did these things without attempts to foster agreements or concerted action with reference to prices, production, or terms of sale. Such associations were declared guiltless of violating the Sherman Act because, "in fact, no prohibited concert of action was found." Corn Products Refining Co. v. Federal Trade Commission, 324 U. S. 726, 324 U. S. 735.
States, operating about 150 mills. Ten companies controlled more than half of the mills, and there were substantial corporate affiliations among many of the others. This concentration of productive capacity made concerted action far less difficult than it would otherwise have been. The belief is prevalent in the industry that, because of the standardized nature of cement, among other reasons, price competition is wholly unsuited to it. That belief is historic. It has resulted in concerted activities to devise means and measures to do away with competition in the industry. Out of those activities came the multiple basing point delivered price system. Evidence shows it to be a handy instrument to bring about elimination of any kind of price competition. The use of the multiple basing point delivered price system by the cement producers has been coincident with a situation whereby, for many years, with rare exceptions, cement has been offered for sale in every given locality at identical prices and terms by all producers. Thousands of secret sealed bids have been received by public agencies which corresponded in prices of cement down to a fractional part of a penny. [Footnote 15]
During the depression in the 1930's, slow business prompted some producers to deviate from the prices fixed by the delivered price system. Meetings were held by other producers; an effective plan was devised to punish the recalcitrants and bring them into line. The plan was simple, but successful. Other producers made the recalcitrant's plant an involuntary base point. The base price was driven down with relatively insignificant losses to the producers who imposed the punitive basing point, but with heavy losses to the recalcitrant who had to make all its sales on this basis. In one instance, where a producer had made a low public bid, a punitive base point price was put on its plant, and cement was reduced 10� per barrel; further reductions quickly followed until the base price at which this recalcitrant had to sell its cement dropped to 75� per barrel, scarcely one-half of its former base price of $1.45. Within six weeks after the base price hit 75�, capitulation occurred, and the recalcitrant joined a Portland cement association. Cement in that locality then bounced back to $1.15, later to $1.35, and finally to $1.75.
may possibly be true, as respondents' economists testified, that cement producers will, without agreement, express or implied, and without understanding, explicit or tacit, always and at all times (for such has been substantially the case here) charge for their cement precisely, to the fractional part of a penny, the price their competitors charge. Certainly it runs counter to what many people have believed -- namely, that, without agreement, prices will vary -- that the desire to sell will sometimes be so strong that a seller will be willing to lower his prices and take his chances. We therefore hold that the Commission was not compelled to accept the views of respondents' economist witnesses that active competition was bound to produce uniform cement prices. The Commission was authorized to find understanding, express or implied, from evidence that the industry's Institute actively worked, in cooperation with various of its members, to maintain the multiple basing point delivered price system; that this pricing system is calculated to produce, and has produced, uniform prices and terms of sale throughout the country, and that all of the respondents have sold their cement substantially in accord with the pattern required by the multiple basing point system. [Footnote 17]
What these particular respondents emphasize does serve to underscore certain findings which show that some respondents were more active and influential in the combination than were others, [Footnote 18] and that some companies
The respondents contend that the differences in their net returns from sales in different localities which result from use of the multiple basing point delivered price system are not price discriminations within the meaning of § 2(a). If held that these net return differences are price discriminations prohibited by § 2(a), they contend that the discriminations were justified under § 2(b) because "made in good faith to meet an equally low price of a competitor." Practically all the arguments presented by respondents in support of their contentions were considered by this Court and rejected in 1945 in Corn Products Co. v. Federal Trade Commission, 324 U. S. 726, and in the related case of Federal Trade Commission v. A. E. Staley Mfg. Co., 324 U. S. 746. As stated in the Corn Products opinion at 324 U. S. 730, certiorari was granted in those two cases because the "questions involved" were "of importance in the administration of the Clayton Act in view of the widespread use of basing point price systems." For this reason, the questions there raised were given thorough consideration. Consequently, we see no reason for again reviewing the questions that were there decided.
324 U.S. at 324 U. S. 729. This price system, we held, resulted in Corn Products Co.'s receiving from different purchasers different net amounts corresponding to differences in the amounts of phantom freight collected or of actual freight charges absorbed. We further held that "price discriminations are necessarily involved where
There is a special reason, however, why courts should not lightly modify the Commission's orders made in efforts to safeguard a competitive economy. Congress, when it passed the Trade Commission Act, felt that courts needed the assistance of men trained to combat monopolistic practices in the framing of judicial decrees in antitrust litigation. Congress envisioned a commission trained in this type of work by experience in carrying out the functions imposed upon it. [Footnote 20] To this end, it provided in § 7 of the Act, 15 U.S.C. § 47, that courts might, if it should be concluded that the Government was entitled to
"All bids subject to 10� per barrel discount for payment in 15 days."
It is enough to warrant a finding of a "combination" within the meaning of the Sherman Act if there is evidence that persons, with knowledge that concerted action was contemplated and invited, give adherence to and then participate in a scheme. Interstate Circuit v. United States, 306 U. S. 208, 306 U. S. 226-227; United States v. Masonite Corp., 316 U. S. 265, 316 U. S. 275; United States v. Bausch & Lomb Co., 321 U. S. 707, 321 U. S. 722-723; United States v. U.S. Gypsum Co., 333 U. S. 364, 333 U. S. 393-394. See United States Maltsters Assn. v. Federal Trade Commission, 152 F.2d 161, 164:
It is important to note that this Court has disagreed with the conclusions of the court below as to the material facts constituting the premise on which that court and this have based their respective conclusions. Accordingly, this Court has neither reversed nor directly passed upon the principal conclusion of law reached by the court below. The court below concluded that there was not sufficient evidence to support a finding by the Federal Trade Commission of the existence of that combination among the respondents to restrain the competition in price that was charged in both counts of the complaint. [Footnote 2/1]
The court below even doubted that the Commission had clearly stated that it found such a combination existed. However, rather than send the case back to the Commission for clarification of the Commission's findings of fact, the Court of Appeals assumed that those findings did state that such a combination existed. The court then concluded that, even if the Commission had so found, there was not sufficient evidence to support the finding. [Footnote 2/2] Accordingly, the court below applied the law of the case to a set of facts that did not include such a combination. On that basis, it held that the Commission's order to cease and desist should be set aside. I agree with the court below in both of these conclusions. [Footnote 2/3] On the other hand, this Court today has held not only
that the Commission found the existence of the combination as charged, but that such finding is sufficiently supported by evidence in the record. This Court accordingly has applied the law of the case to a set of facts which includes a combination among the respondents to restrain competition in price as alleged in the complaint. The resulting effect is that, while the court below has held that, without such a combination, there was not the alleged violation either of § 5 of the Federal Trade Commission Act [Footnote 2/4] or of § 2 of the amended Clayton Act, [Footnote 2/5] yet, on the other hand, this Court has held that, including
such a combination, there was a violation of each of those Sections to the extent charged in the several cases. This Court therefore has not here determined the relation, if any, of either of the foregoing statutes to the absorption of freight charges by individuals when not participating in a combination of the kind charged by the Commission. [Footnote 2/6]
The Commission based its conclusion upon its finding of the existence of the combination charged in its complaint. [Footnote 2/7]
The absence of sufficient evidence to support the conclusions of the Commission was especially impressive in the cases concerning the central California group, the southern California group, the Washington-Oregon group, [Footnote 2/9] and the Huron Portland Cement Company. The
to do so. [Footnote 2/11] This is the field where a producer, for his own purposes and without collusion, often ships his product to a customer who, in terms of freight charges, is
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