Source: https://www.legalcrystal.com/case/101359/ftc-vs-brown-shoe-co-inc
Timestamp: 2017-04-30 11:07:05
Document Index: 539316105

Matched Legal Cases: ['§ 5', '§1', '§ 3', '§ 5', '§ 3', '§ 5', '§ 1', '§ 3', '§ 3', '§ 5', '§ 3', '§ 5', '§ 3']

Ftc Vs Brown Shoe Co Inc - Citation 101359 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Ftc Vs. Brown Shoe Co., Inc. - Court Judgment	LegalCrystal Citationlegalcrystal.com/101359CourtUS Supreme CourtDecided OnJun-06-1966Case Number384 U.S. 316AppellantFtc V Brown Shoe Co., Inc.Excerpt:
ftc v brown shoe co., inc. - 384 u.s. 316 (1966)
the ftc filed a complaint against respondent, the country's second largest shoe manufacturer, under § 5 of the federal trade commission act, charging unfair trade practices by the use of a "franchise stores program" through which respondent sells its shoes to more than 650 retail stores. in return for special benefits from brown shoe company, the franchise stores agree to buy brown shoe lines and to refrain from..... Judgment:
the FTC acted well within its authority under the Act in declaring respondent's franchise program an unfair trade practice. Pp.
384 U. S. 319
(a) On this record, the FTC has power to find such anticompetitive practice unfair.
Federal Trade Comm'n v. Gratz,
253 U. S. 421
, relied on by the Court of Appeals, has been rejected by this Court. Pp.
384 U. S. 320
(b) The franchise program conflicts with the policy of §1 of the Sherman Act and § 3 of the Clayton Act against contracts which remove freedom of purchasers to buy in an open market. P.
384 U. S. 321
(c) Under § 5 of the Federal Trade Commission Act, the FTC has power to arrest restraints of trade in their incipiency without proof that they are outright violations of § 3 of the Clayton Act or other antitrust provisions.
FTC v. Motion Picture Adv. Co.,
-395. Pp.
"to prevent persons, partnerships, or corporations . . . from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce. [
effectively foreclosed Brown's competitors from selling to a substantial number of retail shoe dealers. [
] 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.
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
381 U. S. 367
In holding that the Federal Trade Commission lacked the power to declare Brown's program to be unfair, the Court of Appeals was much influenced by, and quoted at length from, this Court's opinion in
. That case, decided shortly after the Federal Trade Commission Act was passed, construed the Act, over a strong dissent by Mr. Justice Brandeis, as giving the Commission very little power to declare any trade practice unfair. Later cases of this Court, however, have rejected the
view, and it is now recognized, in line with the dissent of Mr. Justice Brandeis in
that the Commission has
broad powers to declare trade practices unfair. [
] This broad power of the Commission is particularly well established with regard to trade practices which conflict with the basic policies of the Sherman and Clayton Acts even though such practices may not actually violate these laws. [
] The record in this case shows beyond doubt that Brown, the country's second largest manufacturer of shoes, has a program which requires shoe retailers, unless faithless to their contractual obligations with Brown, substantially to limit their trade with Brown's competitors. This program obviously conflicts with the central policy of both § 1 of the Sherman Act and § 3 of the Clayton Act against contracts which take away freedom of purchasers to buy in an open market. [
] Brown nevertheless contends that the Commission had no power to declare the franchise program unfair without proof that its effect "may be to substantially lessen competition or tend to create a monopoly,"
which, of course, would have to be proved if the Government were proceeding against Brown under § 3 of the Clayton Act, rather than § 5 of the Federal Trade Commission Act. We reject the argument that proof of this § 3 element must be made, for, as we pointed out above, our cases [
] hold that the Commission has power under § 5 to arrest trade restraints in their incipiency, without proof that they amount to an outright violation of § 3 of the Clayton Act or other provisions of the antitrust laws. This power of the Commission was emphatically stated in
Ń395:
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. 296
See, e.g., Federal Trade Comm'n v. R. F. Keppel & Bro., Inc.,
291 U. S. 310
333 U. S. 693
Atlantic Rfg. Co. v. FTC,
See, e.g., Fashion Guild v. Trade Comm'n,
312 U. S. 463
381 U. S. 369