Court Opinion

ID: 9448390
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:34:27.264712+00
Date Added: 2024-06-11T17:31:24.863779
License: Public Domain

MOORE, Circuit Judge
(dissenting).
The importance of this ease is to be found not so much in its “cease and desist” order that a large grocery chain refrain from seeking for itself promotional benefits from sellers which were probably not granted to others but in its holding, in effect, that the Federal Trade Commission can arrogate to itself the legislative powers of Congress whenever there appears a field which Congress has not covered but which the Commission believes should be covered by legislation of its own making.
For the purpose of achieving moderate brevity, over-simplification may be in order. To regulate various business ■practices deemed to be inimical to our free enterprise economy and the public welfare Congress had passed the Sherman, Clayton and Federal Trade Commission (FTC) Acts. Specific practices were prohibited and in the FTC Act (see 5(a) (1) “unfair methods of competition” were declared unlawful.
Time passed during which each of the Acts was used by the Justice Department and the Commission to prosecute and restrain violations. For the most part, the Justice Department was the watchdog for Sherman and Clayton Act violations and the Commission for “unfair competition” practices as that term was used in common legal parlance1 although there was some overlapping.
As the result of the growth of giant chain stores, by the mid-thirties, the large quantity buyer had assumed a place in our economy far greater than was true when Congress passed the Clayton and FTC Acts some twenty years earlier. Such concentration of power naturally placed the many smaller units in a noncompetitive position. Investigation ensued. After its investigation had revealed the specific factual situations with which it desired to cope, Congress set itself to the task of formulating equally specific statutes to remedy the evils disclosed so far as it believed certain conduct should be declared unlawful. The result was the Robinson-Patman amendments to the Clayton Act which Congress must have hoped would remedy such evils.
In reading these amendments, the purpose of their enactment must be kept in mind. In enacting legislation, Congress must be presumed to intend to authorize or to prohibit those acts which are embraced within the language of the particular statutes enacted. And where the language is clear and unambiguous, the scope and coverage of the statute should be circumscribed thereby. As expressed by its co-sponsor, Congressman Patman, his bill was “to protect the independent merchant, the public whom he serves, and the manufacturer from whom he buys, from exploitation by his chain competitor” (79 Cong.Rec. 9078 (1935)). Thus, Congress was intent upon telling the buyer and the seller quite specifically what they could or could not do, each within its own orbit of activity. Con*102gress thereby was not writing a series of definitions applying to the general term “unfair competition” of the FTC Act. Quite to the contrary, it was prohibiting certain practices in no manner dependent upon the basic facts underlying a legal conclusion of unfair competition. The amendments are completely integrated and unambiguous. They do not have to receive support from any section of the FTC Act (except for enforcement). Each of the subparagraphs is designed to serve its own separate purpose.
Section 2(a),’ directed against sellers, prohibited discrimination in price between purchasers but only where such discrimination had an anti-competitive effect. ■ Sections (c) and (e), relating primarily to sellers and to brokerage and services, are not applicable here. The two sections here involved are sections 2(d) and 2(f). Section 2(d), a seller’s section, makes it unlawful to pay “to or for the benefit of a customer” compensation for services furnished by the customer which are not made available on proportionally equal terms to all other customers competing in the distribution of the commodity sold. In other words, what the seller gives to one he must make available to the other. No words are found in the section making it unlawful for the buyer to receive such payments for services. The failure to include the buyer clearly could not have been inadvertent because the very purpose of the legislation was to curb the power of the mass buyer. Moreover, it would, indeed, have been anomalous in a statute designed to encourage competition to put the stamp of unlawfulness on buyers who attempted to secure better commercial advantages for themselves before making their purchases.
Section 2(f) is a buyer’s section making it unlawful for him “to induce or receive a discrimination in price.” Two qualifications are specified. The act must be done “knowingly” and the discrimination, limited to “price,” must be one which is “prohibited by this section [Sec. 2].” The Commission, however, is not proceeding under this section obviously because “price” is not involved and because it does not wish to be burdened by the proof required to support a violation.
The complaint is a hybrid. Certain words of section 2(f), “knowingly inducing or receiving,” are combined with the provisions of 2(d), namely, benefits not made “available on proportionally equal terms.” The Commission then adds phrases to be found in 2(a) that the practices complained of “are to the prejudice and injury of competitors and the public” and have a tendency to obstruct and restrain commerce. Unable to charge (much less prove) a violation of 2(a), 2(d) or 2(f) and unable to avoid the inexorable mathematical law that three zeros still total zero, the Commission precipitately abandons the Clayton Act which had so generously contributed its language (but not its blessing) to the complaint and by force majeure seeks the protection of its natal act, alleging that Grand Union is guilty of “unfair methods of competition and unfair acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act.” Having just cast off sections 2(d) and (f), the Commission quickly returns to them to turn (by some alchemic process) these two paragraphs not violated by Grand Union into a violation of section 5.
The Commission cannot find any direct Clayton Act violation and, therefore, has to rely on a violation of its “spirit” as constituting unfair competition. So, likewise, is the majority forced to concede that Grand Union’s activity “is not expressly proscribed by that statute [sec. 2(d)] or indeed by any other antitrust statute” (Maj.Op., p. 96) and that the Commission is using section 2(d) “notwithstanding that section’s silence as to buyers” to support its conclusion of unfair competition by a buyer (Maj.Op., p. 95).
This case, as the majority concedes, presents “an admittedly novel application of § 5 of the Federal Trade Commission Act” — as indeed it does. And yet there is really not so much novelty as there *103is presented a good illustration of a difference in judicial philosophies, namely, whether Commissions and courts are to interpret and enforce the laws which Congress has enacted or whether they should by judicial legislation create laws which in their opinions they believe should have been enacted. Thus, in this case neither the Commission nor the majority can understand why a Congress, which carefully delineated the sanctions it wished to impose against sellers and buyers, omitted buyers from the coverage of § 2(d). For want of any justifying reason, they conclude that the omission must have been “inadvertent” — scarcely flattering to a Congress which had the benefit of a lengthy investigation on the subject and showed itself quite capable of dealing with those who received (2(c), 2(f)) insofar as it felt it should deal with them.
Another consequence of Commission and judicial legislation is that all such laws are ex post facto. It has always been a sound policy (if only from the point of view of fair play) that businessmen have an opportunity to know that which is permitted and that which is proscribed so that they may act accordingly. When our system permits any group of individuals whether they be commissioners or judges to substitute their personal conceptions of the “spirit” instead of the words of our statutes, we, indeed, have a government of men and not laws.
Regardless of half-hearted disclaimer, the Commission and the majority in supporting its decision are actually rewriting either section 2(d) or 2(f). They are either adding to 2(d), in substance, the words “and it shall also be unlawful for any such person to receive such benefits” or they are deleting from 2(f) the words “discrimination in price which is prohibited by this section” and substituting the words “any of the benefits set forth in 2(d) above.” As Commissioner Tait so directly says in his clarion dissent, the decision “in effect, legislates-a new antitrust prohibition.”
Referring to the Commission’s decision, Professor Handler, who has long been an astute analyst of developments in the antitrust field, has said: “The plain implication of the opinion is that the Commission, whenever it discovers limitations in legislative language which cannot be overcome by the liberal processes of statutory construction, can utilize the convenient vagueness of the concept of ‘unfair methods of competition’ as an independent source of power ‘to supply what Congress has studiously omitted’111 [Footnote 111: “Federal Trade Commission v. Simplicity Pattern Co., 360 U.S. 55, 67, 79 S.Ct. 1005, 3 L.Ed. 2d 1079 (1959)] from its enactments.” (Handler, Review of Antitrust Developments, The Record, Ass’n of the Bar of the City of New York, Yol. 17, No. 7, p. 402, October, 1961.)
The majority frankly recognize that, “Distinguished commentators have suggested that the Commission here asserts legislative powers which if sustained will permit it too reformulate antitrust law in disregard of specific acts of Congress” and are “sympathetic to this concern over possible misuse of § 5” but they find “no specific reason why Congress omitted buyers from the coverage of § 2(d)” and, hence, conclude that the omission must have been more inadvertent than studious. If, however, the Commission under Section 5 has such broad unlimited powers to fill in assumed omissions, then “the specific acts of Congress in the antitrust field which the Commission administers are essentially superfluous” (Handler, pp. 402-3).
Moreover, even if it be assumed that the Commission can fathom the unenacted intent of Congress and amend either section 2(d) or section 2(f) (by way of Section 5 of the FTC Act) so as to reach buyers knowingly receiving unlawful payments, there still remains the question of whether injury to competition must be shown. While a seller’s participation in a 2(d) transaction is a per se violation, a buyer’s participation in a 2 (f) transaction is not. A buyer’s conduct cannot be condemned under 2(f) unless the Commission can show injury to competition. Thus, if we assume with the *104majority that Section 5 can be used to reach buyers such as Grand Union, we still must decide whether to look to 2(d) or to 2(f) to determine the other “indicia of illegality.” 2 In answering this question, the majority again feels that it can clearly sense the pulse of Congress in 1936 and concludes that Congress would have wanted the court to make the buyer’s participation in a 2(d) transaction a per se violation of Section 5. My senses are not so keen, and I cannot find any evidence that Congress would have expanded 2(d) rather than 2(f) — had it desired to extend the Act to buyers.
Without evidence of specific Congressional intent, we should not be responsible for creating a per se violation. To do so is to ignore the policy conflict of the Robinson-Patman Act with the other antitrust laws, including the FTC Act. See Mr. Justice Frankfurter, dissenting in FTC v. Motion Picture Advertising Service Co., 344 U.S. 392, 405, 73 S.Ct. 361, 97 L.Ed. 426 (1953). To the extent that the Robinson-Patman Act inhibits price and service competition generally, it may often conflict with the objective of the antitrust laws of protecting and fostering vigorous competition for the benefit of the public (and not for the benefit of the individual competitors). The Supreme Court has indicated that, where Congress has left the courts free to make the determination, this conflict is to be resolved in favor of the “broader policies” of the antitrust laws. Automatic Canteen Co. v. F. T. C., 346 U.S. 61, 74, 73 S.Ct. 1017, 97 L.Ed. 1454 (1953). The narrow areas of per se illegality which Congress created in the RobinsonPatman Act should not be expanded by us. We should not make the buyer’s inducement and receipt of a promotional allowance illegal in the absence of a showing of injury to competition when the only prohibition Congress directed to buyers allows the buyer this defense.
There is nothing incongruous about holding that the Commission must find injury to competition to enjoin the buyer when it need not so find to enjoin the seller. In the later case it is enforcing a specific Congressional prohibition; whereas, in the instant case, the majority, in effect, is allowing the Commission to legislate under its general grant of authority in Section 5.
I would set aside the Commission’s order.

. “opposed to good morals because characterized by deception, bad faith, fraud, or oppression”; FTC v. Gratz, 253 U.S. 421, 427, 40 S.Ct. 572, 575, 64 L.Ed. 993 (1920).

. “The identical indicia of illegality should govern, moreover, whenever the Commission chooses to pursue exclusive arrangements as ‘unfair methods of competition’ forbidden by Section 5 of the Federal Trade Commission Act.” Att’y Gen. Nat’l Comm. Antitrust Rep. 148 (1955) (Judge Barnes and Professor Oppenheim, Co-Chairmen).