Legal Document

351 U.S. 305 76 Supreme Court Reporter 937 100 L.Ed. 1209 UNITED STATES of America, Appellant,v.McKESSON AND ROBBINS, Incorporated Number 448. Argued April 30, 1956. Decided June 11, Mr.Ralph S. Spritzer, Washington, D.C., for appellant. Mr. John Pacific KF135 P2 McGrath, New York City, appellee. Chief Justice WARREN delivered the opinion Court. 1 This is a direct appeal by Government under Expediting Act, 32 Statutes-at-Large 823, 15 United States Code KF62 § 29, as amended 62 869, Annotated KF65 U5 from decision District Southern York, interpreting scope exemption antitrust laws provided 'fair trade' legislation. 2 Appellee, Maryland corporation with its home office in largest drug wholesaler States. Operating through 74 wholesale divisions located 35 states, it sells drugstore merchandise various brands to retailers, principally drugstores, substantially throughout nation. For fiscal year ended March 31, 1954, sales all products amounted $338,000,000. 3 Appellee also manufacturer own line products, total which $11,000,000 1954. Its manufacturing operation conducted single division, McKesson Laboratories, at Bridgeport, Connecticut. like each appellee's divisions, has separate headquarters and staff employees, but none 75 separately incorporated. All are component parts same responsible corporation's president board directors. 4 distributes brand retailers two channels: (1) directly (2) independent wholesalers. The major portion distributed divisions. makes important division. Most wholesalers made sold approximately $200,000 other during 1952. 5 To extent possible state law, appellee requires sell them retail prices fixed These set forth published schedules prices. 6 agreements 21 who buy Sixteen these independents compete division chain drugstores their trading areas. On 6, 1951, accordance policy, vice charge merchandising notified that— 7 'None our will any labeled not entered into fair trade contract Laboratories.' 8 As result, 73 had been dealing they bound themselves reselling adhere it. Each competition buys. 9 Government, Section Sherman Act,1 brought this civil action injunctive relief against complaint charged that whom was constituted illegal price fixing violation Act. admitted contracts, claimed were exempted Act Miller-Tydings Act2 McGuire Act.3 10 moved summary judgment on ground Acts do immunize McKesson's wholesalers, since expressly exclude contracts 'between wholesalers' or persons, firms, corporations other.' district judge denied motion.4 He recognized per se announced cases 'No inflexible standard should be laid down govern advance.' 'unwilling, stage case law development legislatively sanctioned resale fixing' apply rule 'in situations absent factual showing illegality.' Such showing, he said, could 'simply pointing some restraint competition.' "true test legality" between producer-wholesaler court held, 'is whether additional destructive occasioned.'5 11 then proceeded trial before another judge, concurred 'ruling Act,' held Government's evidence did establish an 'additional restraint' within meaning previously enunciated case.6 ordered dismissed, took We noted probable jurisdiction.7 12 issue presented narrow one statutory interpretation. does question so-called vertical products. It challenges only price-fixing competition. provides: 13 'Every contract, combination form trust otherwise, conspiracy, commerce among several States, foreign nations, hereby declared * *.'8 14 too often require elaboration now contrary policy underlying illegality depend unreasonableness, conclusively presumed unreasonable.9 no difference motives participants good evil; accomplished express more subtle means; possess market control; amount interstate affected large small; effect agreement raise decrease prices.10 In versus Socony-Vacuum Oil Co., 310 150, 60 811, 84 1129, holding se, said: 16 'Congress left us determination particular schemes wise unwise, healthy destructive. so far concerned, establishes uniform applicable industries alike.'11 And said Court: 17 'A distributor trade-marked article may lawfully limit agreement, implied, persons purchaser resell, except seller moves along route marked Act.'12 18 challenged herein move route. If not, se. There basis supposing Congress, enacting Acts, intended change traditional doctrine. plainly error attempting create category outside those nevertheless spared application rule. 19 passed rider Columbia revenue bill, Congress careful certain maintenance prohibitions 'shall make lawful providing establishment minimum commodity involved, manufacturers, producers, brokers, factors, other.'13 (Emphasis supplied.) 20 Fifteen years later, attached almost identical proviso Act.14 take words statutes normal customary meaning.' Schwegmann Bros. Calvert Corp., 341 384, 388, 71 745, 747, 95 1035. admittedly 94 Thus, even if we read other' modify wholesalers,' would seem clearly exemption. concedes exempt competing product produced neither them.15 Yet urges what done becomes legal product. so, maintains, because contracting acted solely selling buyers rather than competitor buyers. But provide sanctioning fiction McKesson, country's wholesaler, acting when concludes wholesalers.' 22 Any doubts might otherwise raised propriety considering manufacturer-wholesaler 'wholesaler' dispelled last phrase question, continues proscription thus plain can that, without regard categories labels, crucial inquiry parties other. do, permit fix stated 389, 748, 'expressly 'horizontal' functional level.'16 Since competes 'at level' agreements, prevents falling 23 argues brief colloquy Senate floor supporter inquiring Senator Shortly dictate revealed Act's language. But, best, statement inconclusive.17 whose relied nor member committee considered Moreover, having House Representatives prior discussion. nothing proceedings indicate contends given Similarly, show congressional concern prohibition continued, debates little assistance respect problem us. 24 below rely legislative history, finding 'unedifying unilluminating.'18 agree appraisal, troubled language unambiguous.19 excludes firms level. 25 Both press upon economic arguments reasonably have caused support respective positions.20 need ourselves such speculation. limitations beyond cannot go. construe strictly, privilege restrictive free economy. Cf. Masonite 316 265, 280, 1070, 1078, 86 1461. 26 dismissing must, therefore, reversed remanded further inconsistent opinion. 27 Reversed remanded. 28 HARLAN, FRANKFURTER BURTON join, dissenting. 29 Lack sympathy justify giving construction rationalized terms attributable Congress. Rather duty, always, seek out and, possible, give instance, & N Dec. Immigration Nationality Decisions think departed artificial produces results hardly 30 purpose fair-trade allow brand-named protect goodwill his name enjoys controlling branded resold. Old Dearborn Distributing Seagram-Distillers 299 183, 193—194, 57 139, 144, 81 109. necessary result—indeed, very object—is elimination granded offensive federal policy.1 Sufficient protection public interest deemed afforded different brands, safeguard provision denying unless fair-traded open commodities general class.' short, while preserving is, item similar items manufacturers. 31 accept implicit desirable name, there meaningful distinction integrated non-integrated Certainly strong claim manufacturer, same. both eliminated, extend manufacturer's While right non-ingetrated eliminate finds contemplated 'wholesalers' contracts. either case, am unable see eliminated existed eliminated. bases suggested equally tenuous reflect subtlety analysis history. So unsatisfactory, indeed, attempts rationalize result contended for, chooses them, provisos clear unnecessary hypothesize consistent rational discrimination producers. Indeed, fact history point squarely opposed Court's reading statute (see note opinion, 942), prompts enough doubt Acts. reasoning this: other'; well with' wholesalers; therefore forbidden 'corporations verbalistic argument answered being connection sale capacity 'manufacturer' 'wholesaler.' Neither conclusive other, answer found looking relation basic permitting goods. 33 above, necessarily contemplate brands. Viewed light purpose, become readily understandable. manufacturing, wholesaling, retailing level, utilized Thus manufacturers other; broader scale, achieved retailers. Further, initiated anyone owner goodwill, justification bearing serve Interpreting considerations, conclude interpretation fits produces, arbitrary fully harmony maintain brands.2 34 reasons, hold affirm below. 209, 4. 50 693, 1. 66 632, 45. 122 F.Supp. 333. F.Supp., pages 337—339. illustration kind conduct satisfy test: 'If, example, established producer became though stipulated first step toward intent gouge consumers, suffice prima facie statutes.' R. 180. 350 922, 211. 209. E.g., Trenton Potteries 273 392, 397, 47 377, 379, 700; Ethyl Gasoline Corporation 309 436, 458, 618, 626, 852. See Standard company 221 1, 65, 502, 517, 55 619. 224, 843—844. 221—222, page 843. Bausch Lomb 321 707, 721, 64 805, 812, 88 1024. 693. qualified immediately preceding it, goods authorized intrastate transactions 'free class others *.' 632. 5(a) Federal Trade Commission adding, inter alia, 5(a)(2). specifically exempts bind refuse sign agreement. proviso. stated: '(5) Nothing contained paragraph subsection shall referred subsection, Appellee's brief, Page 6. motion filed Court, however, applies competitive sold.' (Appellee's emphasis.) Motion affirm, Pages 5—6. Previous phrases appear laws, seems modeled. FTC Report 'Resale Price Maintenance,' 80—81 (1945). phrase, apparently never included statute. meticulous inclusion acts significance. 98 Cong.Rec. 8870. Humphrey, Sparkman, '* If, producer, distributors, price-maintenance relative him trade-mark brand, distributor, retailer resells wholesale, exists bill requirements met. 'On hand, enters prescribing horizontal lawful. 'In words, getting together illegally. get illegal, say prescribed section general, resell original seller's product; whereas, sellers buyer reseller exist involved. 'It keep mind, many producers alike. 'Under vertical, sense position function still making act commodity, entering retailers.' added.) remarks confined retailers' deal competition' phrase. And, former, Humphrey discussing situation where actual manufac- turer-wholesaler indicated 15, supra, until jurisdiction, flatly disagreed part statement. 336. Greenwood 366, 374, 410, 414. maintains addition eliminating parties, enables leverage latter's claims, leaves undersell outlets inefficient, permits insulate inroads efficient operators setting higher otherwise. According effects present nonintegrated manufacrurer. trading' outlets, provides 'necessarily involves merchandise.' situations, source, downstream arrangements outlets.' awareness sides refused follow 'either alternate horns dilemma 337. Instead, advocated case-by-case examination arises, burden 'some 339. discussion contentions conclusions designed support, Weston, Resale Maintenance Market Intergration: Fair Foul Play? Geo.Wash.L.Rev. 658; Note, Yale L.J. 426; 54 Col.L.Rev. 282. refers 'passed Columbia, bill.' pertinent passing later reaffirmed Distillers 1035, regards 'non-signers' Commission, administrative agency specially administering reached conclusions. Eastman Kodak Commerce Clearing Reg.Rep. (10th ed.), par. 25, 291.

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