Legal Document

340 U.S. 231 71 Supreme Court Reporter 240 95 L.Ed. 239 STANDARD OIL CO.v.FEDERAL TRADE COMMISSION. Number 1. Reargued Oct. 9, 1950. Decided Jan. 8, 1951. [Syllabus from pages 231-233 intentionally omitted] Mr. Howard Ellis, Detroit, Mich., for petitioner. James W. Cassedy, Washington, D.C., respondent. Cyrus Austin, New York City, Retail Gasoline Dealers Association of Michigan, Inc., et al. as amici curiae, by special leave Court. William Simon, Chicago, Ill., Empire State Petroleum Association, Justice BURTON delivered the opinion 1 In this case Federal Trade Commission challenged right Standard Oil Company, under Robinson-Patman Act,1 to sell gasoline four comparatively large 'jobber' customers in Detroit at a less price per gallon than it sold like many small service station same area. The company's defenses were that (1) sales involved not interstate commerce and (2) its lower jobbers was justified because made retain them good faith meet an equally low competitor.2 Commission, with one member dissenting, ordered company cease desist making such differential. 43 F.T.C. 56. Appeals slightly modified order required enforcement modified. 173 Reporter, 2nd Series 210. We granted certiorari on petition presents important issue Act which has been settled 338 865, 70 140. argued our October Term, 1949, reargued term. 339 975, 1018. 2 For reasons hereinafter stated, we agree court below but petitioner that, Act, if each customer competitor. 3 I. Facts. 4 Reserving separate consideration facts determining commerce, other material are summarized here basis Commission's findings. described those Red Crown raise all issues constitute about 90% Of petitioner's 5 Since effective date June 19, 1936, tank-car prices. Those prices have 1/2$ tank-wagon identical practice, stations resold prevailing retail prices.3 Each so-called free resell or wholesale. Each, some time, retail. One now resells only others largely As resale prices, two 'jobbers' their wholesale rates. two, however, reflected, varying degrees, reductions cost reducing effect these thus reached competing part through operated purchased found reduced 'have resulted injuring, destroying, preventing competition between said favored dealers respondent's (petitioner's) major brands * *.' 41 263, 283. distinctive characteristics maintains sufficient bulk storage take delivery quantities (of 8,000 12,000 gallons) rather 700 800 is customary stations; owns operates tank wagons facilities (3) established business insure purchases million gallons year; (4) adequate credit responsibility.4 While deliveries no doubt less, gallon, area, there finding difference accounts entire reduction 'jobbers,' proceed assumption does entirely account difference. 6 Petitioner placed reliance upon evidence offered show jobber more competitors. treated relevant. 7 II. Sales Were Made Interstate Commerce. 8 come Clayton amended they must commerce.5 so made. 271, Cir., 210, 213-214. 9 Facts follows: Indiana corporation, whose principal office Chicago. Its obtained fields Kansas, Oklahoma, Texas Wyoming. refining plant Whiting, Indiana. It distributes products 14 middle western states, including Michigan. case, carried tankers Great Lakes marine terminal River Rouge, Enough accumulated during navigation season winter's supply available terminal. remains periods nearby stations, while ownership en route refinery market 'Although brought Rouge pursuant orders already taken, demands Michigan territory fairly constant, customers' could be accurately estimated, flow stream kept surging Whiting Detroit.' individual it, taken Such well within jurisdictional requirements Act. Any conclusion would fall short recognized purpose reach operations businesses local concerns. temporary occurs area deprive character. Stafford versus Wallace, 258 495, 42 397, 66 735. Compare Walling Jacksonville Paper Co., 317 564, 570, 63 332, 336, 87 460, Atlantic Coast Line R. 275 257, 268, 48 107, 110, 72 270.6 10 III. There Should Be Finding Whether Not Petitioner's Price Reduction Was Good Faith Meet Lawful Equally Low Competitor. 11 presented tending prove lawful sought succeeded retaining customers, although merely approached matched, did undercut, several competitors trial examiner findings point7 declined do so, saying: 'Based record concludes matter law whether discriminations respondent further unnecessary determine alleged competitive fact grade quality equal public acceptance. Accordingly attempt find regarding matters because, even though question may competitors, defense face affirmative proof discrimination injure, destroy prevent named retailer-customers.' 281 282. 12 affirmed position.8 13 before amendment and, accepted, complete charge unlawful discrimination. At time provisions § 'Sec. 2. That shall any person engaged course either directly indirectly discriminate different purchasers commodities where substantially lessen tend create monopoly line commerce: Provided, nothing herein contained differences grade, quality, quantity commodity sold, makes due allowance selling transportation, communities competition: And provided further, persons goods, wares, merchandise selecting own bona fide transportations restraint trade.' (Emphasis added first proviso.) 38 Statutes-at-Large 730—731, 15 United States Code KF62 (1934 ed.) 13, Annotated KF65 U5 13. us, therefore, amendments deprived previously effectiveness defense. 2, amended, quoted below, showing italics clauses bear proviso us. distributed newly created subsections (a) (b). These read together relation supersede. original phrase 'That prevent' still used introduce defenses. relating meeting competitor appears subsection applied services price, alone expressly condemned (a). instant recognizes absolute change seller prove, 2(a), differential allowances changes response changing conditions. three introduced 'nothing prevent', embraced word 'justification' sentence 2(b). natural, conclude entitled effect, without regard also actual potential injury level traceable seller. says, 2(b) result reduction. distinction 2(a) (b), limited eliminates certain difficulties arose example, omits reference 'in *' restricts differentials occurring competition. excludes undercut 'lower price' None changes, cut into core consists provision wherever threatens customer, seller, price. Actual competition, least elemental form, preserved. 16 Subsections 17 indirectly, destroy, who grants knowingly receives benefit discrimination, them: make manufacture, sale, resulting differing methods delivered: conditions affecting marketability goods concerned *. 18 '(b) Upon being made, hearing complaint section, furnished, burden rebutting prima-facie justification charged violation unless affirmatively shown, authorized terminating discrimination: his furnishing purchaser competitor, furnished competitor.' part.) 49 1526, 13(a) 13(a, b). 19 This 2(b), considered before. Both Corn Products Refining Comm., 324 726, 65 961, 89 1320, Comm. E. Staley Mfg. 746, 971, 1338, support reviewed length. occasion review theory contended Commission. sustain seller's unquestionably recognize relevance decision based insufficiency establish defense, inadequacy law.9 20 supra, after recognizing had allowed favor examined then said: 'Examination testimony satisfies insufficient Hence petitioners failed competition.' added.) page 741, 968.10 21 most Court's devoted discussion proceeds assumption, applicable here, competitor's protected, counteroffer proves On majority Appeals, fact, accept decided accused seller.11 Court, review, reversed judgment emphatically availability obligation 22 'Congress left determination person, discriminatory acted See Pacific Ass'n, 273 52, 63, 47 255, 258, 534; Algoma Lumber 291 67, 73, 54 315, 318, 78 655. present respondents' 'lower' consequently faith, amply supported record, think erred setting aside portion desist. 23 'In appraising evidence, statute place impossible sellers, emphasized requirement statute, places proving 24 '* requires discriminated existence lead reasonable prudent believe granting Nor wrong holding respondents burden.' 758, 759-760, 976. 25 also, Cement Institute, 333 683, 721-726, 68 793, 813-815, 92 1009; Morton Salt 334 37, 43, 822, 1196; Gypsum 76, 92, 160. All asks sufficiency 26 addition, widespread understanding reflected actions statements members counsel Commission.12 Representatives Department testified value Act.13 see reason depart interpretation.14 27 heart national economic policy long Sherman Acts, dealing protect, monopoly, prevent.' 135 453, 455. need reconcile, entirety, underlies Acts.15 28 enough say Congress seek abolish radically curtail substantial self-defense against raid requests temptingly him essential, survival, lose customer. might product, loss forcing much higher unit customers. congressional purpose, situation, compel choose ruinously cutting match one, refusing raising remaining cover increased costs. is, hand, plain language practice permits realistically necessarily 29 sustains beneficiaries derive advantage may, natural events, reduce obvious dealer always affect dealer's level, discriminatory. Likewise, initiated would, met beneficiary's among just interpreted when level. So interpreted, little, any, applicability practically meaningless. meant permit consequences follow action 30 argument suggests situations injure this, indicates weigh potentially injurious levels beneficial permitting absence explicit specific standards comparison difficult how can balanced hesitate establishing dubious readily understandable simply continuing absolute, scope existed 31 accordingly, remanded instructions remand conformity opinion. ordered. 32 Reversed remanded. 33 MINTON took case. 34 REED, dissenting. 35 investigated practices Company distributors, (anti-price discrimination) Standard's denial justification, ground trade necessity refiners. concluding violated federal prohibitions sale entered system. enforced minor modification. 56; 36 allow sellers protecting buyers buyers' advantages gained cause enactment 1936 1914 solve problem. impossibility drafting fixed words flexibility myriad led put authority anti-monopoly legal price.1 disadvantage choice positive precisely far he go beat interpretation Act.2 Believing agree, state reasons. 37 condemns position rebuts prima facie establishment forbidden require nevertheless enjoinable buyer's decides saying, 253, 250: 'On Act.' seems erroneous. What follows dissent demonstrates, think, intended amend avenue escape given discriminators 'meeting competition' clause should narrowed. leaves what almost wide open 256, seq., infra. clear us means real amendment. 39 fosters free-enterprise system unfettered producers distributors accepted method hands consumers expense.3 are, statutory exceptions unlimited competition.4 Nondiscriminatory pricing tends weaken otherwise maintaining cannot antagonist's get single But obviously concluded greater accrue fostering access supplies merchants business.5 40 limits 1914, 730, Section enabled use investigatory regulatory handle maintenance ability rivals obtain terms. moved toward objective. margin appear followed Phrased summarily italicized source undertook avoid Act.6 will noted little done overcome arising Formerly 'discrimination Now 'made competitor'. 241, 245: 'It price.' still, interpretation, opposite corners, gets offer another located. 'actual defense' intact. Legislative History. last addition curbs trade, narrow turn. Though narrow, careful investigation regulation, attainable attempted prosecutions courts limitations judicial procedure. aid set out parts legislative history. 44 broad exception control raised problems aware. reporting redrafted version S. 3154, Senate's companion bill House became Senate Committee Judiciary, February 3, pointed weakness suggested harsh remedy, elimination note mollifying Act.7 March, Judiciary report form. draftsmen's strengthen laws brokerage allowances, absorptions costs.8 commented s let 'meet actually competitor.'9 bills recommendation Commission.10 unable restore desired evidently way action.11 45 Events proposed legislation pertinence. inserted ineffective exact form bill. draft adopted similar ultimately enacted. 80 Cong.Rec. 6426, 6435. House, Representative Patman explained view dangers proviso.12 Conference.13 Chairman managers, Utterback, Conference Report agreed received permission print explanation proviso. He 'does up bar shown evidence. determined justify given, pertinent statement margin.14 46 Statutory Interpretation. re sume origin gives section charge, period various admitted, elements likewise Does 2(b)? Or rebut price,15 competition? asserts position, concur. reason. development information concerning strengthening evil dealt easy avoidance prohibition objective debates, recommendation, this. quite definitive point. Because experience refused continue Yet adoption nationally chain retailers, give retailer completely low-cost producer goods. very type remedy. To seem consonant powers 'quantity' sales, structure wording Amendment conduce conclusion. divided subsections. stated body substantive offense, listed, series provisos, circumstances permissible. Thus illegal transportation Listed justifications appeared competition'. respect provision, location, phrasing. Unlike first, retained offense provisos affording full discriminations; deal procedural proceedings, specifically treat proof. process division, separated off relegated subsection, Unless believed fortuitous, inferred banished division procedural. way, reflect intent diminish sweeping Act's appearing worded practices, 'differentials (making) manufacture *,' 'price contrast provisions, provide 'shall practice; provides showing' practice—meeting shifts focus Consistent other, modifications consistent expressed former cases rebuttal requiring Reference 1320 1338. basing point scheme said, 968: 50 'The witnesses personal knowledge transactions, witness' 51 went quoted, 244, 246 consider successful rebuttal. statement, cited 1138. 52 citation included words, 752 753, 974: 'Prior amendments, Report, Haw. Hawai‘i Reports KFH45 A2 Rep. 2951, 74th Cong., 2d Sess., Pages 6—7; Utterbach (sic), Committee, 9418.' 53 After relies Utterback's opinion, goes Again issue. Staley, above, shows Court.16 arguments contrary position. No definite committee reports henceforth having 2(a). earlier Perhaps implication favorable Patman's omission floor. n. 12, supra. 55 underlying avoiding discriminations, discussed herein, adopt Appeals.17 proven character violates becomes 56 Conclusion. ruling, enlarge discussing affirm decree principle, order. 57 CHIEF JUSTICE BLACK join dissent. Specifically text (b) 242—243, 246, them. not, pursue here. About 150 owned leased independently Their operators buy short-term agreements. 208 subleased denying industry group operational convenience, held classification arbitrary 'no wholesale.' 273. term convenience identification, wholesalers retailers. relates 'engaged 13(a), 13(a). 'Commerce' defined 'trade 12. Fair Labor Standards relied inconsistent result. They hold purposes ceased distributor. Higgins Carr Bros. 572, 337, 468; refiner concluded: recognition (petitioner) Ned's Auto Supply wholesaler (which gasoline), forced business. recognition, ever since, possessed qualifications since continued transactions parties, respects (Conclusion Fact IX, 5098 5099.) branded gasolines times subsequent March 7, 1938, Stikeman man Citrin-Kolb Wayne (the jobbers), comparable quality.' Fact, X, 5104.) 'Now contention complained point, assumed held, contention, 'We controlling level.' 214, 217. factual necessary (see supra), yet refuses, law, consideration. below: defence.' 144 211, indicated lawful. twice Seventh Circuit. 1943 wherein occurred lessened promoted 'for (under 2(b)) urged petitioners, thereto.' 456. 1944, 221. judge Id., 227—231. His colleague squarely established. 221—225. third both 225—227. unanimously materiality 'discriminations resulted, result, *." 222. orders, issued saving propriety injuring Ferro-Enamel Corp., 36; Anheuser-Busch, 986; Bausch & Lomb Optical 186. filed Walter baron Wooden, Assistant Chief Counsel, Hugh White, Examiner Temporary National Economic 1941: safeguards question. guaranteed curtailed mandate self attacks vital economy attack.' Basing Point Problem 139 (TNEC Monograph 42, 1941). Allen C. Phelps, Trial Counsel Export Division Subcommittee Policies Foreign Commerce January, 'This upheld courts, my effectively erase Hearings 236, 81st 1st Sess. 66. 274—275. Herbert Bergson, Attorney General, testifying Department, January 25, secton (2(b)) presently 77. 236 Peyton Ford, 320. Bergson following June, 1949: 'While problem arises obtains denied purchasers, solution lies opportunity sellers.' 1008, Attention directed again history cases. especially, 752—753, 974. history, best, inconclusive. limit, abolish, essence fail protect competitive. suggestion remarks protection see, S.Res. 224, 70th directing investigate chain-store Final Chain-Store Investigation, S.Doc. 4, Representatives, drafted it: represents contraction exemption limit permitted until If himself liable penalties act, treble damages. further.' H.R.Rep.No.2287, 16. 6431—6436, 8229, 8235. Somewhat emphasis, managers accompanying conference report, new 'provision operate rule proceeding H.R.Rep.No.2951, 7. Conferees Record 9418. emphasizes lawfully neither justifies disregarding nor failing faith. theory, §§ 13a, 13b, 21a, whole 1—7, note, seq. Adelman, Effective Competition Antitrust Laws, 61 Harv.L.Rev. 1289, 1327—1350; Burns, Anti-Trust Laws Regulation Competition, Law Contemp.Prob. 301; Learned Isaacs, Law: Some Assumptions Expectations, Harv.Bus.Rev. 137; McAllister, Control States: A Survey, approach illustrated clarify President's veto message 96 8721, reports, H.R.Rep.No.1422, H.R.Rep.No. 1730, 14, Page 61. Associated Press States, 326 1, 1416, 1421, 2013; Material 287, 309, 550, 561, 701. E.g., 5, 5; Communications 1934, 221, 221; Miller-Tydings Mason, Current Status Monopoly 62 1265. merits legislation, 1289. Act: commodities, '(Sec. 2.) S.Rep.No.1502, 4: principally that: permissible quantity; substitute remedies retaliation destructive central object Liberty cuts expense elsewhere, unmasked liberty locally cost, weapon progressively powerful, deadly resources, whatever merit efficiency. reported closes dangerous loopholes, efficient, protects securely inundations mere power size. 'Specific phrases reported, 'One: 'Section attaches relations designed extend intrastate purely interstate. Discriminations excess sound involve generally element loss, minimum profits costs, recouped When State, latter. beyond, conversely proper well-recognized suppress.' 3: restore, possible. equality anti-trust unfair better consumers, workers, independent producers, manufacturers, merchants, businessmen. 'To accomplish amends strengthens prohibiting delivered. prohibits except rendered, advertising proportionally strikes basing-point lessens monopoly.' 16: S.Doc.No.4, 96: 'A simple uncertainties prohibit unjust agency, subject apply principle particular situations. soundness extent valid become matter. therefore recommends "It transaction unfairly unjustly use, consumption, Territory thereof District Columbia insular possession jurisdiction States." utilized legislation. 64: 'If 'on sold,' 'only transportation,' competition,' unlawful, 'may commerce.' Discriminatory concessions store's manufacturer, manufacturing discouraging stores manufacturer's strongly manufacturer competition." 90, id., called need. 7: 'Some stands (Final Report) above referred to, following.' 8235: 'Mr. Chairman, N Dec. Immigration Nationality Decisions ask gentleman (Mr. Patman). great industries Ohio bill, reading "And 'I beginning words: "Provided, 'Will explain proposals? Patman. really corporate chains market, down losses destroyed objects around localities, destroying destroyed. hope insist amendment, 'equally compete merchants. right, man. Cooper Ohio. gentleman's mean? cost. that. amendment.' 265 266, 6—7: proviso— "That existing conferees obstacles receded, stricken. competitor." 9418: connection proof, noted, rights, liabilities, duties. lying laid latitude limitations. construed carte blanche violate oppressive liability nullify act inception enforcement, nearly every mass receive product. another. self-defense, attack claimed competency depends attack. practical commercial bribe lure away futile achieve plainly purposes.' 6, refers, 247, notes 11, opinions Circuit Products, 211 216. fair assume reversal Staley. hardly wisdom enforcing recently advised balance preferable good-faith defense,' urge Congress.' 337 293, 311, 69 1051, 1060, 93 1371. confirmed officials

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