Legal Document

384 U.S. 316 86 Supreme Court Reporter 1501 16 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 587 FEDERAL TRADE COMMISSION, Petitioner,v.BROWN SHOE COMPANY, Incorporated Number 118. Argued April 25, 1966. Decided June 6, Ralph S. Spritzer, Washington, D.C., for petitioner. Robert or Haw. Hawai‘i KFH45 A2 McRoberts, St. Louis, Mo., respondent. Mr. Justice BLACK delivered the opinion of Court. 1 Section 5(a)(6) Federal Trade Commission Act empowers and directs 'to prevent persons, partnerships, corporations * from using unfair methods competition in commerce deceptive acts practices commerce.'1 Proceeding under authority § 5, filed a complaint against Brown Shoe Co., Inc., one world's largest manufacturers shoes with total sales $236,946,078 year ending October 31, 1957. The charged revolve around 'Brown Franchise Stores' Program' through which sells its to some 650 retail stores. alleged that this plan Brown, corporation engaged interstate commerce, had 'entered into contracts franchises substantial number independent shoe store operator customers require said restrict their purchases resale lines prohibit them purchasing, stocking reselling manufactured by competitors Brown.' Brown's who entered these restrictive franchise agreements, so charged, were given return special treatment valuable benefits not granted did enter agreements. In answer Commission's admitted approximately 259 executed written agreements over 400 others program without execution agreement. Also attached as an exhibit unexecuted copy 'Franchise Agreement' which, when representative dealer, obligates give dealer but other certain services, including among architectural plans, costly merchandising records, services field representative, right participate group insurance at lower rates than could obtain individually. return, according agreement set out answer, retailer must make promise: 2 'In & N Dec. Immigration Nationality Decisions will: 3 '1. Concentrate my business within grades price representing Company Franchises Division will have no conflicting Brands Company.' 4 further operators 'such Stores individually varying degrees accept perform obligations contained such implicit Program,' refuses grant dealers are dropped voluntarily withdraw Program *.' foregoing admissions existence operation buttressed many separate detailed fact findings trial examiner, was effectively foreclosed selling dealers.2 Based on concluded contract method meaning 5 ordered cease desist use. On review Appeals aside order. doing court said: 6 'By passage Act, particularly thereof, we do believe Congress meant limit programs case. custom giving free service those buy is widespread, cannot agree it commerce.' 339 Reporter, 2nd 45, 56. 7 addition held there 'complete failure prove exclusive dealing might be violative Act.' We asked treat general conclusion though intended rejection fact. this. Neither statement nor any indicates purpose hold evidence failed show between more franchised restrained buying competing competitors. Indeed, view crucial formal attribute existed most lived up obligations. Thus question decision whether can declare practice second manufacturer Nation, pay consideration hundreds purchasers order secure contractual promise they deal primarily purchase has power find, record here, anticompetitive unfair, subject course judicial review. See Atlantic Rfg. company versus FTC, 381 357, 367, 85 1498, 1505, 14 443. 8 holding lacked much influenced quoted length Court's commission Gratz, 253 421, 40 572, 64 L.Ed. 993. That case, decided shortly after passed, construed strong dissent Brandeis very little trade unfair. Later cases Court, however, rejected Gratz now recognized line broad powers unfair.3 This well established regard conflict basic policies Sherman Clayton Acts even may actually violate laws.4 case shows beyond doubt country's shoes, program, requires retailers, unless faithless substantially obviously conflicts central policy both take away freedom open market.5 nevertheless contends proof effect 'may lessen tend create monopoly' would proved if Government proceeding rather Act. reject argument element made pointed above our cases6 arrest restraints incipiency amount outright violation provisions antitrust laws. emphatically stated F.T.C. Motion Picture Adv. 344 392, Pages 394—395, 73 361, Page 363, 97 426: 9 'It clear designed supplement bolster stop full blown, condemn 'unfair competition' existing violations them.' 10 acted declaring completely blown not. 11 Reversed. 38 Statutes-at-Large 719, amended, 15 Code KF62 45(a)(6) (1964 ed.). 5(a)(1) provides 'Unfair declared unlawful.' found provided 'prime motivation' join remain program; resulted stores purchasing 75% requirements Brown—the remainder being part 'conflicting' lines, agreement; foreclose outlets competitors, small manufacturers; enforcement effected teams men called upon stores, urged elimination manufacturers' reported deviations then cancelled provision Compare States, 370 294, 296, 82 1502, 1508, 510. See, e.g., R. KF105 F3 Keppel Bro., 291 304, 310, 54 423, 425, 78 814; Cement Institute, 333 683, 693, 68 793, 799, 92 1010; Fashion Originators' Guild America Comm'n, 312 457, 463, 61 703, 706, 949; 369, 1506. 26 209, ed.), declares illegal 'Every contract, combination form trust otherwise, conspiracy, restraint several foreign nations 731, relevant part: shall unlawful person sale goods condition, agreement, understanding purchaser thereof use competitor seller, where monopoly cited note 4, supra.

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