Court Opinion

ID: 9468181
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:07:28.828332+00
Date Added: 2024-06-11T17:40:44.435378
License: Public Domain

SWYGERT, Circuit Judge,
dissenting.
I dissent from the majority’s opinion because Falls City proved as a matter of law a meeting of competition defense under section 2(b) of the Robinson-Patman Act, 15 U.S.C. § 13(b).1 The majority agrees with the district court’s holding that the situation here is like the one in FTC v. A. E. Staley Mfg. Co., 324 U.S. 746, 65 S.Ct. 971, 89 L.Ed. 1338 (1945).2 The Staley holding, however, is not at all apposite to the situation in this case. In Staley, the defendants had adopted a basing-point system used by their competitors in the manufacture and sale of glucose. This pricing system was found illegal in a related opinion, Corn Products Refining Co. v. FTC, 324 U.S. 726, 65 S.Ct. 961, 89 L.Ed. 1320 (1945). The Court held in Staley that defendants’ show*1233ing that they had followed the illegal pricing system of their competition did not prove a defense under section 2(b) to justify the price discrimination.3 In this case, on the other hand, no one has suggested that the prices charged in Indiana by Falls City’s competitors — the larger brewers such as Anheuser-Busch and Pabst — were at all illegal, so that merely following their prices did not by itself make Falls City’s pricing policies illegal.
The majority opinion and the district court both view the price discrepancies as a result of Falls City’s raising its prices to its Indiana wholesalers. That statement is no more accurate than it would be to state that the differentials were caused by lowering the prices to Falls City’s Kentucky customers. There was no norm or starting point against which such statements could be tested. Pricing policies are the result of competitive forces that develop over the years. The fact that brewers’ prices, including Falls City’s, have reached a higher level in Indiana than in Kentucky is only a reflection of those trends. The majority ignores this fact and bases its opinion solely on the existing discrepancy in prices charged by Falls City. A determination as to whether Falls City has shown a meeting-competition defense cannot rest on so narrow a perspective. As the Supreme Court has noted, a section 2(b) defense is to be “a flexible and pragmatic, not technical or doctrinaire, concept.” United States v. United States Gypsum Co., 438 U.S. 422, 454, 98 S.Ct. 2864, 2882, 57 L.Ed.2d 854 (1978), quoting Continental Baking Co., 63 F.T.C. 2071, 2163 (1963).
While it is true that Robinson-Patman “places emphasis on individual competitive situations, rather than upon a general system of competition,” Staley, supra, 324 U.S. 753, 65 S.Ct. at 974, this does not mean, as the district court held, that Falls City could not meet a general range of competitors’ prices in Kentucky by instituting a single competitive price.4 The fact that all of Falls City’s competitors in Kentucky did not agree upon a single price should not deprive it of the opportunity to meet that competition. It chose to do so by charging a single price statewide, rather than meeting the different prices of other brewers in each county. As noted in Callaway Mills v. FTC, 362 F.2d 435, 441 (5th Cir. 1966), the adoption of a single pricing system is a perfectly reasonable and proper method of meeting competition. That is all Falls City did in this case.5
It is the essence of the free market that a seller will charge as much as competition allows. One can assume that Falls City would charge as high a price as it could in both Kentucky and Indiana, and that it would charge the higher Indiana price in Kentucky if it could. Competition among brewers in Kentucky, however, was evidently stiffer than it was in Indiana, for the prices charged by all brewers was lower in Kentucky. Falls City was therefore forced to charge a lower price in Kentucky to meet *1234the competition there. Such action is the essence of a section 2(b) defense.6

. Section 2(b), 15 U.S.C. § 13(b) (1976), reads in relevant part,

. See majority opinion, supra, pp. 1230-1231.

. The Court wrote that Staley would be entitled to a section 2(b) defense “only upon the assumption that the statute permits a seller to maintain an otherwise unlawful system of discriminatory prices, merely because he had adopted it in its entirety, as a means of securing the benefits of a like unlawful system maintained by its competitors.” FTC v. A. E. Staley Mfg. Co., 324 U.S. 746, 753, 65 S.Ct. 971, 974, 89 L.Ed. 1338 (1945). See Rowe, Price Discrimination under the Robinson-Patman Act (1962), pp. 221-22 (Staley prevented “a seller from vindicating an otherwise unlawful price discrimination by aping another’s illegal price in the context of collusion.”).

. Similarly, the fact that Falls City had to meet competition in Kentucky did not mean it had to lower prices in Indiana. As the Supreme Court noted in Standard Oil v. FTC, 340 U.S. 231, 250, 71 S.Ct. 240, 250, 95 L.Ed. 239 (1951), “There is nothing to show a congressional purpose ... to compel the seller to choose only between ruinously cutting its prices to all its customers to match the price offered to one or refusing to meet the competition and then ruinously raising its prices to its remaining customers to cover increased unit costs.” (emphasis added)

. The district court also held that Falls City could not claim it was meeting competition because it had not received any threats from Kentucky wholesalers that they would buy beer elsewhere. No seller should ever have to wait to receive such threats before it can meet competitors’ lower price, and no case has ever so held.

. I also dissent with respect to the majority’s holding that Falls City overcharged Vaneo for state taxes. The problem seems to have arisen from a rounding error on Falls City’s invoices. Vaneo does not dispute that it always paid the price it expected to pay — the announced F.O.B. price at Falls City’s loading docks — nor that Falls City paid the State of Indiana exactly what it was due. Only by placing technicality over reality can the majority hold that an overcharge existed.