Document: 346 U.S. 61 73 S.Ct. 1017 97 L.Ed. 1454 AUTOMATIC CANTEEN CO. OF AMERICAv.FEDERAL TRADE COMMISSION. No. 89. Argued Dec. 12 and 15, 1952. Decided June 8, 1953. Mr. Edward F. Howrey, Washington, D.C., for petitioner. Robert B. Dawkins, Washington respondent. Justice FRANKFURTER delivered the opinion of Court. 1 The Robinson-Patman Act, 15 U.S.C.A. § 13 et seq., directed primarily against sellers who discriminate in favor large buyers, includes a provision under which proceedings may be had buyers knowingly induce or receive discriminatory prices. That provision, 2(f) is here construction first time as result complaint issued by Federal Trade Commission petitioner, buyer candy other confectionary products resale through 230,000-odd automatic vending machines operated 33 States District Columbia. Petitioner, incorporated 1931, has enjoyed rapid growth attained, so we are told, dominant position sale machines. 2 introduced evidence that petitioner received, some instances solicited, prices it knew were much 33% Lower than quoted purchasers, but not attempted to show price differentials exceeded any cost savings have sales Petitioner moved dismiss on ground made prima facie case. This motion was denied; stated case violation been established proof received lower like goods 'well knowing being favored over competing purchasers,' circumstances where requisite effect competition shown. question whether more due allowance did need decided 'at this stage proceeding.' On petitioner's failure introduce evidence, findings induced below list them without inquiry seller, assurance from might justify differentials. thereupon entered cease desist order. 46 F.T.C. 861. review, Court Appeals affirmed,1 holding Commission's does require showing absence justification. 194 F.2d 433. 3 Section roughly counterpart, sections Act dealing with discrimination sellers, vital prohibition enforcement scheme Act. In situations difficulty proving their sellers' costs, could, if view prevails, become major reliance simplified only plaintiffs suing treble damages. Such enforcement, however, readily extend beyond prohibitions and, doing so, help give rise uniformity rigidity open conflict purposes antitrust legislation. We therefore thought necessary grant certiorari. 344 809, 16. 4 Enforcement Clayton Act's original declaration frustrated inadequacies statutory language Congress 1936 enacted sweeping amendments contained what known 49 Stat. 1526, U.S.C. 13, 13. Chief among express exemption different quantities goods, an interpreted leaving quantity-discount free discounts quantity selling such buyers. Goodyear Tire & Rubber Co. v. F.T.C., 6 Cir., 101 620. effort tighten restriction inimical public interest, two provisions bearing issues case.2 It unlawful regard quantity, although discounts, differentials, could still justified they 'no allowance' differences addition sought reach buyer, capable exerting pressure smaller making 'knowingly prohibited section.' 5 Since precision expression outstanding characteristic exact formulation issue before us avoid inadvertent pronouncement one context when same separate consideration settings. Familiar loose affords too ready temptation comprehensive construction. think imperative confine ourselves possible dispute here. asked settle controversy involving simply burden coming forward record, abundant its individual transactions itself felt bound animadvert undue proliferation Government lawyers,3 taken presenting varying degrees bargaining exerted seller obtain those purchasers. instances, found, method 'inform prospective suppliers terms would acceptable (petitioner) supplier basis offered customers supplier.' at 888. A typical instance maximum found series negotiations representatives explain kind he enjoy make differential. sometimes gave estimates considered 'representative' percentage various costs freight, packaging, returns allowances.4 7 no finding negativing existence stating whatever there least equal received. knowledge actual particular only, knowledge, were. part, filed offers many testify never told differential savings. An offer turn testimony these cross-examination; brought out inquired excess savings, written statement affidavit exceed up 'any figures' serving 8 claims not, 'knowing inducement differences,' while contends case, justifying entry order fails evidence. Before proceeding examination provisions, desirable consider about centers. saying view, introducing seller's buyer's thereof put buyer; burden, insists, difficult meet unreasonable construe used imposing it. If construed, statute, contends, create presumption lacking rational connection fact violate process. 9 invited intricacies inherent attempt proceeding. elusiveness data, apparently cannot obtained ordinary business records, reflected sellers.5 aware how problems are, record happily examine detail. sufficient note that, whenever issue, content accounting estimates; study seems required, perhaps stop-watch studies spent personnel salesmen truck drivers, numerical counts invoices bills number items entries quantitative measurement operation business.6 What required do know. argues generally available published data experience trade reasonable his costs. There suggestion opinion, take attitude toward showings respect 'general trade,' use phrase, unsupported factual analysis yet far acceptable, indeed strongly reproved accountants, Commission.7 10 No doubt placed present standards, heavy. Added considerable himself demonstrating hands ordinarily obtainable even after detailed investigation business. subpoena records likely adequate. obtaining information hands.8 matter studying afresh. Insistence thus implications; almost inevitably degree cooperation between offend policies, also expose secrets prejudice arm's-length future. Finally, but, here, approximately 80 issue. 11 background arises. legislative setting indicates congressional recognition charge responsibility comparable, possible, sellers. Thus, least, can confident reading words 2(f), 'a section', reference substantive defined elsewhere Act.9 apparent forbidden include pertinent precluded inducing based provide defense. is, indeed, seriously disputed parties. For 'discrimination price';10 price' must 'which Even comprehended within term price', speaks discriminations, read declaring bounds 'defenses' reflect differences, fluctuating market conditions, bona fide attempts competition, defenses set provisos §§ 2(a) 2(b). say, converse follows, all cases receipt limits argue, occurs knows distorts leave word 'knowingly' entirely significance 2(f). whatsoever facts indicating possibility liable not. seen above refer But uncritical impression, come often range discriminations way another relation 'knowingly.' limit area think, used. attempting own activities special receive' charging result. argument comprehend engages price. means exert pressure, find greater support less employed. ignores 'receive' opens entangling difficulties interpretation pressure.11 14 urges, explanation similar 2(a), limited continued systematic fairly recipient illegality.12 While decide ever knowledge,13 recognizes, into illegality. Not arguments unsatisfying, fairer elucidation points discriminations.14 explained informing proposed discount discourage buyer.15 Of course, devices private fear prosecution equally well achieved providing if, otherwise, learned accorded competitors, unable, light policy expressed legislation, ambiguous putting peril bargaining. rejected sturdy scope presumably left areas our economy otherwise regulated.16 Although administrative alternative open, duty reconcile interpretation, except to, broader policies laid down Congress. has, virtue given authority develop Sherman 1—7, note, created discrimination, say adequately manifest reasons engendering enable accept conclusion. Cf. Eastern-Central Motor Carriers Ass'n United States, 321 194, 211—212, 64 499, 507—508, 88 668. 16 conclude induces either justification him defenses. conclusion course preliminary As noted earlier, precise evidence—a though related prohibition. considerations, requires further balance convenience evidentiary rules Assuming, know cost-justified, determine shift buyer. 17 Commission, lower, employs familiar interpretative tools adequate immediate serviceability. labels defense, cost-justification, 'exception general prohibition' conventional prohibition.' foundation commonsensical readings comparable benefits. said part 2(b) lay Act.17 section provides, 'Upon * rebutting prima-facie shall upon person charged section'. held Morton Salt cost-justification proceeding, 'prima-facie made' clearly refers back 'proof (of) thus, decision Salt, consists difference having competition. Saying differs 'only containing requirement discriminations,' asks hold 'plus additional element violative 2(a).' 18 concern resulting counterparts, elements section' However be, recognizes 'additional element' centers address ourselves. may, passing consistency both constitutes disturbed concerned admittedly independent 2(a). 19 shown At point urges now 'that affirmatively contributed solicitation, negotiation action him.' phrased, insisting once shown,18 shifts main 2(b), which, above, one, claimed benefits 20 To answered speak 'person section,' proviso mainly sellers,19 chronology ultimately drafted mind, few dealt 21 answer given; given. infelicitous enacting purpose, clear apply proceedings.20 because read. Considerations fairness operative must, controlling drafting clearer contrary Addison Holy Hill Fruit Products, 322 607, 617—618, 1215, 1221, 1488. decisions striking beside point.21 And information, good reason should it, importance most nearly accommodates judges legislators rule ought 'has peculiar command discriminations.'22 Where, considerations inapplicable, disregard indications drawn merely literal fair costs23 soon differed. Certainly broad power subpoena, prior filing complaint, better footing Indeed, enter domain discretion matters, inconvenient join offending proceedings. 22 significant function, indicate whom who, full little likelihood defense nevertheless proceeded difficult. Proof ascertain cost-justified. situation afford prosecution. By example buys competitor served manner amount exertion notice substantial justified. show, establish methods purchased competitor. differ, manufacture, delivery differential, will depend extent size discrepancy questions isolated. very small compared reasonably sufficient. 23 illustrate;24 surely why shifting unsuspecting discriminations. event, spell imposition harsh appears solid unexplained sanction contradicts requirements fairness. scrupulously abstain requiring particularization exacting court review facts, important, since reviewing correctness standards applies essential mode reaches conclusions, shelter behind generalities looseness essentially impossible really conclusions review. Chicago, M., St. P. P.R. Co., 294 510—511, 55 462, 467, 79 1023. 24 Because circumstances, claim creates unlawful, fall lack Tot 319 463, 63 1241, 87 1519. Note, E(dmund) M. M(organ), 56 Harv.L.Rev. 1324. seemed unnecessary presumptions, call attention persuasion, apply. 25 judgment Appeals, accordingly, reversed charges Count II (Count I us), remanded instructions remand opinion. ordered. 26 Reversed instructions. 27 DOUGLAS, BLACK REED concur, dissenting. 28 graphic illustration statute enervating effect. 29 38 730, amended 13(b), provides services facilities furnished, section, unless shown, authorized terminating *.' (Italics added.) 30 makes 'for person' engaged commerce 31 'the charged' plainly 32 nature condemned outlaws 'in purchasers commodities grade quality' substantially prevent lessen tend monopoly respects 'who grants receives benefit discrimination'. permits sale, differing quantities' sold delivered. determines 'buyer lower', insufficient 'shift buyer.' practice intended bans burdens A. E. Staley Mfg. 324 746, 759—760, 65 971, 977, 89 1338, approved Standard Oil 340 231, 71 240, 95 239, them. 34 shows persistent continuous efforts wheedling coercing granting summarized sedate bizarre justified: 35 'Respondent One inform respondent supplier. times refused buy reduced merchandise others. certain alleged accrue supplier's eliminated, would, respondent's carrying form inducement, advise 'standard price.' letters Curtiss Candy Company November 1939, W. Schrafft Sons Corporation February 1937, companies follows: 36 " Alleged Savings Corp. 37 (1) Freight of...... 6%. 5% 7% (2) Sales of... 7%. 39 (3) 24-count cartons of. 5%. 40 (4) Return allowances 1%. 1% 2% 41 (5) Free deals samples 42 8%..... X% 43 (6) Shipping containers ..... 44 Total deductions......... 27%. 21% 25%&#149; 45 advised purchases eliminated it.' wield clubs powerful advantages merchants. Often merchants gain concessions suppliers. evil acknowledged 334 37, 43, 68 822, 826, 92 1196. endeavored curb disclosed record. House Report reveals, line incidentally actively solicit negotiate H.R.Rep. 2951, 74th Cong., 2d Sess., pp. 5—6. 47 disregards history. Court's justified; prove mind. let acts themselves. undertakes bludgeon competitive advantage, unfairness privileges demanded justifications. again expert.* professions. coercive influence, go rebut granted cross petition Commission. concedes impropriety Ruberoid 343 470, 72 800, 96 1081, rendered us. concession, assume will, direction, reconsider enforcement. 'Sec. 2. (a) commerce, commence, directly indirectly, quality, involved use, consumption, Territory Columbia insular possession place jurisdiction injure, destroy, them: Provided, nothing herein delivered: (The relevant limits, right select changes response changing conditions.) '(f) recognized need, common litigation, care prosecuting officers overburden 'The disclose plethora cumulative adduced counsel instant matter. Neither harassment litigants nor waste funds needless reiteration countenanced, seem name group respondents price, certainly supplied ample differentials.' re Automatic Canteen America, 861, 892. Failure especially heavy 115 recited relate provoked mind prudent man. short, informed led acceptance preference inference collection authorities secondary material see 1011. See Fuchs, Requirement Exactness Justification Price Service Differentials Tex.L.Rev. 1; Haslett, Discriminations Justifications Robinson-Patmant Mich.L.Rev. 450, 472; Sawyer, Accounting Statistical Discrimination Cases, Iowa L.Rev. 244. discussion specific Aronson, Defendants Business Law (Werne ed.), 212, 227; Taggart, Cost Principle Minimum Regulation, 110, Mich.Bus.Studies 151, 260 (1938); Warmack, Problems CCH Symposium (1947) 105; Comment, Ill.L.Rev. 60. rulings 'demonstrate expert extrinsic weight FTC believes materials objectivity relevance analysis.' 1011, 1013—1014. 1014. supra, 5. Compare Minneapolis-Honeywell Regulator 351, 394, 'an extensive study' 'sincere efforts' accepted. See, e.g., 5, 107, 110. Longman, Distribution Analysis, 250, articles cited Cong.Rec. 6428, 9419; H.R.Rep.No. Sess. 8. Were strictly argued support. Congressman Utterback, submitting conference report House, stated, '* mere difference. Underlying meaning idea relationship exists parties entitles treatment, whereby casts disadvantage other.' 9416. Plainly enough, statement, mean competitors justification, puts unfavored disadvantage. 453—466, McAllister, Control Contemp.Prob. 273, 291. isolated phrase Time freedom adopt pass economical processes, see, 2287, 10, 17; 9415, 9417; pressure. Edwards, Maintaining Competition, 161. suggest warrant characterizing 'bludgeoning.' greatest 'pressure' inconsiderable manufacturers 5—6, explaining 2, 'or discrimination,' purpose 'is exempt surrounding clause routine negotiation, arrangement justly chargeable receiving discrimination.' given, language, contradiction 80, 81, 1027, 1028, post. purport 2(d) 2(e). spoke quite contemplated 'makes easier (for manufacturer) resist demand sacrificial cuts mass-buyer customers, enables illegality discount, liability customers.' 9419. Adelman, Effective Competition Antitrust Laws, 1289, 1331; 44—45, 827, S.Rep.No. 1502, 3. entirety reads '(b) Upon made, hearing discrimination: furnishing purchaser faith low competitor, furnished competitor.' Throughout procedural preceding proviso; proviso, construed Comm., 245, referred 'proviso 2(b)'. connection, 4, post, 24. example, concerning seller'; further, 'to discrimination', usefully cf. 9418. Patman, describing proof, said: 'It exactly law today. restatement existing law. So am you strike out. land there.' 8231. aid understanding significance, seller. bars 'same' automatically, cost. Nor helpful problem portions 3599. Samuel H. Moss, Inc., 148 378, 379; 8241. Our application question. Evidence, attached affirmative statements 67, 1021. appropriate subject careful scrutiny. instance, puffing rather anything rely with. hand, wish refuse relied cost-justified; might, together raise serious doubts claim. leaves numerous squeezing

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