Opinion ID: 1227014
Heading Depth: 1
Heading Rank: 4

Heading: sherman act

Text: The final question presented is whether or not the Unfair Practices Act should be declared void as violating the federal antitrust prohibitions contained in the Sherman Act, 15 U.S.C. § 1. [13] Wheeling Wholesale argues that the Unfair Practices Act is a price-fixing statute analogous to a fair trade law, which allows a manufacturer to set the minimum price at which its products can be sold. It points out that state fair trade laws were specifically exempted from Sherman Act coverage until the U.S. Consumer Goods Pricing Act of 1975, 89 Stat. 801, was passed by Congress removing this exemption. This point was recognized in California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 102, 100 S.Ct. 937, 941-42, 63 L.Ed.2d 233, 241 (1980): For many years ... the Miller-Tydings Act of 1937 permitted the States to authorize resale price maintenance. 50 Stat. 693. The goal of that statute was to allow the States to protect small retail establishments that Congress thought might otherwise be driven from the marketplace by large-volume discounters. But in 1975 that congressional permission was rescinded. The Consumer Goods Pricing Act of 1975, 89 Stat. 801, repealed the Miller-Tydings Act and related legislation. Consequently, the Sherman Act's ban on resale price maintenance now applies to fair trade contracts unless an industry or program enjoys a special antitrust immunity. (Footnote omitted). [14] Wheeling Wholesale argues that our Unfair Practices Act is analogous to a fair trade law and, therefore, violates the Sherman Act. We are cited several United States Supreme Court cases, which hold that even though a state statute violates the Sherman Act, the statute may be upheld if it falls within the state immunity exception to the Sherman Act. [15] We decline to address the state immunity issue because immunity only arises as a consideration after the challenged state statute has initially been found to violate the Sherman Act. The threshold inquiry, therefore, is whether our Unfair Practices Act violates the Sherman Act. Cf., California Retail Liquor Dealers, 445 U.S. at 102, 100 S.Ct. at 941, 63 L.Ed.2d at 241 (The threshold question is whether California's plan for wine pricing violates the Sherman Act.). We do not agree with Wheeling Wholesale's argument that fair trade laws are analogous. As explained in California Retail Liquor Dealers, fair trade laws are price maintenance schemes. Their distinctive characteristic is a provision that enables a trademark owner, usually a manufacturer, to set by contract with a retailer or wholesaler the price at which the trademarked product should be sold. See 1A R. Callman, supra, § 6.03. We have not been cited nor have we found any United States Supreme Court case which has had occasion to directly consider whether a state sales-below-cost statute violates the Sherman Act. In Safeway Stores, Inc. v. Oklahoma Retail Grocery Ass'n, Inc., 360 U.S. 334, 79 S.Ct. 1196, 3 L.Ed.2d 1280 (1959), the United States Supreme Court upheld Oklahoma's statute prohibiting sales below cost against an equal protection challenge. It declined to address the claim that the statute was preempted by federal antitrust laws. 360 U.S. at 342 n. 7, 79 S.Ct. at 1202 n. 7, 3 L.Ed.2d at 1286 n. 7. The Ninth Circuit Court of Appeals had this issue before it in William Inglis & Sons Baking Co. v. ITT Continental Baking Co., Inc., 668 F.2d 1014 (9th Cir.1981), cert. denied, 459 U.S. 825, 103 S.Ct. 57, 74 L.Ed.2d 61 (1982), and had no difficulty in upholding California's sales-below-cost statute against a claim that the field had been preempted by the federal antitrust laws. Although the issue that it violated federal antitrust laws was not directly raised, it is clear from the court's comments in note 62 that it found the statute to be completely compatible with federal antitrust laws: The inference of preemption is especially inappropriate because the basic purposes of the state and federal statutes are similar. See Exxon Corp. v. Governor of Maryland, [437 U.S. 117, 132-33, 98 S.Ct. 2207, 2217, 57 L.Ed.2d 91, 104-05 (1978) ]. The California statute was designed to `safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition.' Cal.Bus. & Prof.Code § 17001 (West 1964) (statement of legislative purpose); Harris v. Capitol Records Distributing Corp., 64 Cal.2d 454, 461, 413 P.2d 139, 144, 50 Cal.Rptr. 539, 544 (1966). The purposes of the Sherman Act hardly could be stated more succinctly. 668 F.2d at 1050. See also Baseline Liquors v. Circle K Corp., supra ; Walker v. Bruno's, Inc., 650 S.W.2d 357 (Tenn.1983). We have initially set out the legislative intent under our Act, which is to prevent sales at less than cost for purposes of injuring competition. W.Va.Code, 47-11A-1 and -2. This type of predatory price fixing lies at the heart of the Sherman and Robinson-Patman Acts as evidenced by this statement from United States v. National Dairy Products Corp., 372 U.S. 29, 33-34, 83 S.Ct. 594, 598, 9 L.Ed.2d 561, 566, reh'g denied, 372 U.S. 961, 83 S.Ct. 1011, 10 L.Ed.2d 13 (1963): The history of § 3 of the Robinson-Patman Act indicates that selling below cost, unless mitigated by some acceptable business exigency, was intended to be prohibited by the words `unreasonably low prices.' That sales below cost without a justifying business reason may come within the proscriptions of the Sherman Act has long been established. See, e.g., Standard Oil Co. v. United States, 221 U.S. 1 [31 S.Ct. 502, 55 L.Ed. 619, 34 L.R.A.N.S. 834] (1911). Further, when the Clayton Act was enacted in 1914 to strengthen the Sherman Act, Congress passed § 2 to cover price discrimination by large companies which compete by lowering prices, `oftentimes below the cost of production ... with the intent to destroy and make unprofitable the business of their competitors.' H.R. Rep. No. 627, 63d Cong., 2d Sess. 8. The 1936 enactment of the Robinson-Patman Act was for the purpose of `strengthening the Clayton Act provisions,' Federal Trade Comm'n v. Anheuser-Busch, Inc., 363 U.S. 536, 544 [80 S.Ct. 1267, 1271-72, 4 L.Ed.2d 1385, 1390] (1960), and the Act was aimed at a specific weapon of the monopolistpredatory pricing. Moreover, § 3 was described by Representative Utterback, a House manager of the joint conference committee, as attaching `criminal penalties in addition to the civil liabilities and remedies already provided by the Clayton Act.' 80 Cong.Rec. 9419. We, therefore, conclude that the Unfair Practices Act, W.Va. Code, 47-11A-1 through -14, does not violate the antitrust provisions of the Sherman Act, 15 U.S.C. § 1, since both acts prohibit sales below cost for the purpose of injuring or destroying competition. [16] Because we find no violation of the Sherman Act, there is no need to discuss the applicability of the state exemption doctrine under the Sherman Act. The certified questions having been answered, this case is dismissed from the docket. Answered and Dismissed.