Court Opinion

ID: 9448392
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:34:27.659159+00
Date Added: 2024-06-11T17:31:24.870000
License: Public Domain

MOORE, Circuit Judge
(dissenting).
Just as the decision in Grand Union Co. v. F. T. C., decided today, subjected a buyer to sanctions not imposed by Congress under the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(d), so too does this decision resort to the generalities of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 (“unfair competition”) to make unlawful that which Congress, although afforded an opportunity to do so, has not forbidden. Under the guise of restraining threats to competition, the result reached by the majority here, in my opinion, has a diametrically opposite effect. The facts clearly support this conclusion.
Petitioners sell at retail newsstands books and magazines published by the publishers here involved. Dissatisfied with the terms of the purchase contracts, petitioners demanded better terms, primarily rebates and compensation for promotional allowances. Apparently, petitioners’ purchasing power was such that the publishers, although protesting in some instances, agreed. In any free and competitive economy, both buyer and seller should have the right to consummate the purchase transaction only if mutually satisfied as to terms. A buyer ought to be able to drive as hard a bargain as business expediency warrants; a seller should be able to exact the best terms as possible from his point of view. Freedom to agree or disagree, I trust, has not been legislated out of existence — by Congress at least. Congress, however, has, in the interest of protecting the buyer in a less advantageous bargaining position, declared that the benefits achieved by the strong shall also be accorded proportionally to the weak. But Congress has never said that a buyer can bargain for better terms only at his peril.1 Any such law would completely stifle the competitive system. By way of illustration, a buyer desirous of obtaining certain products for 10 cents a pound less might demand such a reduction either in price or in promotional allowances. The buyer may be one of 10,000 customers of the seller which customers may range from mass buyers to a country grocery store in a small hamlet. Yet the decision of the Commission and the majority for all practical purposes precludes the buyer from asking for better terms and, accepting them if granted, unless he first inquires of the seller whether the terms are being made available to others and then to verify any such assurance canvasses all the seller’s customers to ascertain whether the seller has made the terms of his bargain available to them. *113The order proposed would, in effect, require that the potential buyer not enter into his purchase contract until he has ascertained that the prospective seller has “affirmatively offered” proportionally equal terms to all his other customers competing in the sale of his products. To comply with the Commission’s order after the buyer and seller had agreed upon their terms, the buyer would have to demand a list of all the seller’s customers. This probably would not be forthcoming. However, if it were, the buyer would then have to write to all competing customers disclosing in this competitive age the terms of his proposed purchase and inquire whether the seller had “affirmatively offered” the same, or proportionally equal, terms to them. The more cautious buyer would request proof of such affirmative offer from each of his competitors by affidavits; the more incautious might risk an affidavit from the seller, listing all proportionally equal arrangements made with other customers. Far-fetched though this hypothetical situation may seem, reality is rudely injected into the hypothesis in reading, “Nor can there be any objection to including the term ‘affirmatively offered.’ ”, because it “simply defines the obligation of the buyer to learn whether payments are ‘proportionalized.’ ” “If he is apprised of sufficient information [whatever that is] * * * to create a duty of further inquiry, the buyer, under this order, must see first if the payments are affirmatively offered to his competitors on a proportionally equal basis; if not, the order indicates [that] he may have a further duty to see whether they are ‘otherwise made available.’ ” (Maj.Op., p. 111). Here then is a direct mandate to all buyers pursuing their supposed right to bargain for better terms than the seller proposes or had previously given that they cannot accept such terms as may be agreed upon unless the buyer “sees first” what the nature of the businesses of hundreds of the Seller’s customers may be and then tries to analyze whether the Seller has offered proportionally equal terms to all. The mere statement of such a proposition should be an adequate answer as to why Congress imposed no such burden on buyers. Such a rule would place the bargaining power exclusively in the hands of sellers and be the very antithesis of competition because no buyer could meet the burden. Furthermore, inability of one buyer to seek such benefits would actually prejudice all other buyers because if he were successful the seller would be obliged under § 2(d) to confer similar benefits on them.
No prohibition against seeking or receiving promotional allowances even though they turn out to be disproportional has been written into either Section 2(d) or 2(f). There was good reason for the seller-buyer differences in the two sections. Far from being “inadvertent,” a consideration of the unequal position of the parties must have led to the distinct treatment accorded to each in these sections. A seller is in a unique position to know whether he is giving proportionally equal allowances to his customers. The customers could not possibly have such facts available. Ascertainment of price discrimination would be comparatively simple in contrast to obtaining information as to a seller’s proportionally equal treatment of buyers. Yet even as to price the Commission must come forward with proof that the effect of the discrimination may be substantially to lessen competition and cannot rely on a per se violation. In short, inducement and receipt by a buyer become a violation only after the Commission has sustained its burden and after the buyer has had an opportunity to avail itself unsuccessfully of permitted defenses. Automatic Canteen Co. v. F. T. C., 346 U.S. 61, 73 S.Ct. 1017 (1953). I cannot conceive that Congress intended that the Commission could escape these requirements by prosecuting specific violations of one law (the Clayton Act) under the terms of another (the FTC Act). As Professor Handler says in his “Review of Antitrust Developments,” *114The Record, Association of the Bar, New York City, Vol. 17, No. 7, p. 403:
“Nowhere in the voluminous literature on the history and administration of the Federal Trade Commission Act nor in the comprehensive jurisprudence on unfair methods of competition will one find support for the view that the Commission can avoid limiting statutory language by resort to the broader contours of Section 5.”
He continues on p. 406:
“There is no suggestion in either statute that the provisions of the Clayton Act are to be merged with Section 5 and lose their identity as the careful expression of the legislative will on the legitimacy of the practices to which they relate.”
I would accept the Handler critique as a sound expression of proper scope of Commission and court powers expressed in his conclusion that (p. 408):
“Congress vested the Commission with a broad and flexible mandate. But it did not endow it with the power to legislate. In the final analysis a democracy cannot permit its laws to be rewritten by administrative agencies or the executive. Where administration discloses defects or limitations in the laws drafted by Congress with which the techniques of interpretation are unable to cope, the remedy is to request supplemental legislation from the elected representatives of the people who, under our system of government, are the final arbiters of national policy. This has been the settled practice in the antitrust field where numerous legislative changes have been made over the years.”
In my opinion, the Commission has rewritten sections 2(d) and 2(f), thus creating laws which Congress for good reason has not enacted. The petitioners have not violated those laws which Congress chose to enact and, hence, I would set aside the Commission’s order.

. The Supreme Court made this point clear in Automatic Canteen Co. v. F. T. C., 346 U.S. 61, 73, 77, 73 S.Ct. 1017, 1024, 1953, when it said:
“Not only are the arguments of the Commission unsatisfying, but we think a fairer reading of the language and of what limited legislative elucidation we have points toward a reading of § 2(f) making it unlawful only to induce or receive prices known to be prohibited discriminations. For § 2(f) was explained in Congress as a provision under which a seller, by informing the buyer that a proposed discount was unlawful under the Act, could discourage undue pressure from the buyer. Of course, such devices for private enforcement of the Act through fear of prosecution could equally well have been achieved by providing that the buyer would be liable if, through the seller or otherwise, he learned that the price he sought or received was lower than that accorded competitors, but we are unable, in the light of congressional policy as expressed in other antitrust legislation, to read this ambiguous language as putting the buyer at his peril whenever he engages in price bargaining. Such a reading must be rejected in. view of the effect it might have on that sturdy bargaining between buyer and seller for which scope was presumably left in the areas of our economy not otherwise regulated. Although due consideration is to be accorded to administrative construction where alternative interpretation is fairly open, it is our duty to reconcile such interpretation, except where Congress has told us not to, with the broader antitrust policies that have been laid down by Congress.”