Court Opinion

ID: 9446830
Source: CourtListenerOpinion
Date Created: 2023-08-03 22:19:24.50474+00
Date Added: 2024-06-11T17:30:47.862329
License: Public Domain

STEEL, District Judge
(dissenting).
Had petitioner1 paid for the broadcasting time of the chains, either directly by payments to the chains, or indirectly by payments to the broadcasting companies independently of the purchase by petitioner of its own broadcast time, the payments clearly would have been for the “benefit” of the chains within the meaning of § 2(d). The petitioner did not do-either of these things. But the Commission and a majority of the court hold that an identical significance must be attributed to the payments which petitioner-made to the broadcasting companies in. purchasing air time for itself.
A violation of § 2(d) of the Clayton Act entails, among other things, the following elements: (1) a discriminatory payment by a vendor for the benefit of a *446customer, (2) in consideration for services or facilities furnished by the customer to the vendor in connection with the sale of a commodity of the vendor. Without both elements of benefit there can be no § 2(d) violation. The finding of the Commission that the in-store promotions offered by the broadcasting companies induced petitioner to enter into its contracts with the broadcasting companies implies that petitioner anticipated the receipt of a benefit by way of in-store promotions. This finding relates solely to the second element of a § 2(d) offense. The present point of inquiry is directed to the existence of the first element of a § 2(d) violation, viz., whether petitioner made a payment for the benefit of the chains.
In determining whether the petitioner’s payments to the broadcasting companies were for the “benefit” of the chains within the meaning of § 2(d), it is easy to become bogged down in a semantic morass. The word “benefit” has various meanings depending upon the context of its use. In a sense, every dollar which the broadcasting companies took into their coffers during the time when air time was being granted to the chains was for the benefit of the chains regardless of the source of the income. Revenue was the life blood of the broadcasting companies upon which their very existence depended and without which the chains would have had no air media over which to advertise. The Clayton Act, of course, is not concerned with this type of benefit. It is aimed at discriminatory advantages which a vendor by virtue of his own conduct confers upon a vendee, or, under certain sections of the Act, reciprocal advantages which a vendor and vendee confer upon each other by virtue of their own respective acts. Whether petitioner’s payments to the broadcasting companies were for the benefit of the chains must be gauged from this standpoint.
The contracts between the broadcasting companies and the chains under which the chains received air time antedated the contracts between the broadcasting companies and petitioner. The execution of the agreements by petitioner was not a contingency upon which the right of the chains to air time depended. That right had theretofore accrued; it was fixed, immediate and unqualified. Nothing was required of petitioner or anyone else to bring into fruition the right of the chains to air time save the performance by the broadcasting companies of their contracts with the chains. Petitioner was in no way responsible for this. So that on the face of the matter, the advertising which the chains become entitled to receive the moment they put pen to paper with the broadcasting companies was not the result of any payment by petitioner.
The Commission and a majority of the Court assert, however, that the separate elements of the sales promotional plan initiated by the broadcasting companies, i. e., the two sets of contracts, the brochures of solicitation, and the designation of products for in-store promotions, cannot properly be given fragmentary evaluation, but that each must be treated as an integral part of the whole. This approach would be understandable if the broadcasting companies were defendants and their activities were charged to be violative of the law. The broadcasting companies stand at the hub of the transaction. It was their correlating activities which gave to the plan whatever cohesiveness and interdependence was inherent in it. It was their efforts which were responsible for obtaining the in-store sales promotional rights from the chains. It was they who chose the chains from which petitioner might make its selection for in-store promotions. All this was done by the broadcasting companies without any prior commitment, authorization, agreement, or understanding with petitioner. This is a stipulated fact. So that no basis exists for the Commission’s finding that the broadcasting companies occupied an “agency” relationship to petitioner through which petitioner in effect channeled payments to the chains in the modified form of broadcasting time.
*447The conclusion of the Commission that the actions of petitioner were of discriminatory benefit to the chains within § 2 (d) intentment is not aided by theorizing that the broadcasting companies would not have renewed their contracts with the chains unless the sales promotion plan had been sufficiently supported by the totality of suppliers, including petitioner, who purchased broadcast time.2
3 This approach makes petitioner’s violation of the Act depend not only upon the contemporaneous actions of other suppliers but also upon the subsequent actions of the broadcasting companies in renewing their contracts with the chains when, so far as the record reveals, neither the suppliers nor the broadcasting companies were subject to control by petitioner. Whatever benefit the chains may have derived from this combination of events, is from petitioner’s standpoint, too vicarious and causally remote to enmesh petitioner in the Act.
In the light of the peripheral relationship which petitioner bore to the plan, the statement of the Commission that petitioner became a “party” to and “adopted” the plan is meaningless. All petitioner did was to accept what the broadcasting companies offered. Yet, under the Commission’s concept of “benefit”, petitioner would be culpable under the Clayton Act even if it had not designated any of its products for promotion by the chains. For under the Commission’s view, it was petitioner’s payments to the broadcasting companies which constituted payment for the air time allotted to the chains. The amount of petitioner’s payments did not depend upon whether it designated products for in-store promotions. Petitioner’s payments were the same in either case. The failure of petitioner to designate products for in-store displays would have exculpated petitioner from liability under § 2(d), for the furnishing of services or facilities by a customer is a sine qua non to a § 2(d) violation.3 However, without the designation of products for in-store promotion, petitioner’s payments to the broadcasting companies, under the Commission’s reasoning, would clearly have rendered petitioner liable under § 2(d) 4 for furnishing advertising discriminately to the chains, and under § 2(a) 5 for indirect *448price discrimination in favor of the chains if the effect had been monopolistic or destructive of competition. For unlike § 2(d) which is aimed at reciprocal vendor-vendee benefits, §§ 2(a) and 2(e) are directed solely against unilateral discriminations by a vendor.
If the Commission’s conception of “benefit” is adhered to, the only way in which the petitioner could have escaped the toils of the Clayton Act during the period when the broadcasting companies were offering in-store promotions would have been either to forego completely advertising over the air through the broadcasting companies offering the promotions, or to buy air time for all of petitioner’s customer’s on a basis proportionately equal to that on which the broadcasting companies had allotted air time to the chains. Petitioner would have found itself in this unhappy plight solely because of the contracts which the broadcasting companies made with the chains for which the petitioner was in no way responsible.
Carried to its logical limit, the decision of the Commission means that if a common supplier of a vendor and vendee, without pre-arrangement with the vendor, grants the vendee terms more favorable than the supplier has granted other customers of the vendor, the vendor must stop dealing with the supplier, give proportionately equal “benefits” to all of its other customers, or be adjudged guilty of Clayton Act discrimination. This result would follow regardless of how vital the commodities or services furnished by the supplier might be to the vendor. A construction of § 2(d) which carries within itself the seeds of consequences so harsh, unreasonable and oppressive should not be reached unless required by a clear Congressional mandate. This I am unable to discern.
The foregoing views are not at variance with the cases which the majority of the Court has cited. Herbert v. Shanley Co., 1917, 242 U.S. 591, 37 S.Ct. 232, 61 L.Ed. 511, and M. Witmark & Sons v. L. Bamberger & Co., D.C.D.N.J.1923, 291 F. 776 involved constructions of the Copyright Act. Pittsburgh Athletic Co. v. KQV Broadcasting Co., D.C.W.D.Pa. 1938, 24 F.Supp. 490, was concerned with principles of unfair competition and the Communication Act of 1934 in their relationship to interference with a contractual right to broadcast baseball games. These decisions are scarcely pertinent to a determination whether petitioner’s payments to the broadcasting companies were a “benefit” to the chains within the purview of the Clayton Act. To the extent that State Wholesale Grocers v. Great Atlantic & Pacific Tea Company, 7 Cir., 1958, 258 F.2d 831, may have application, it tends to refute rather than to support the decision of the Commission.
It may be that the sales promotional plan of the broadcasting companies is economically undesirable and that the broadcasting companies which sponsored it are beyond the reach of the present law. But this is no reason for making a whipping boy out of petitioner by affirming the far-fetched conception of Clayton Act “benefit” which the Commission has adopted.
Judicial responsibility requires that a Court which sits in review of an administrative order shall interpret the applicable statute and hold unlawful and set aside any agency action not in accordance with law, 5 U.S.C.A. § 1009(e). In the fulfillment of that responsibility, I would set aside the order of the Commission in each case and direct a dismissal of the complaints.

. General Foods will be treated as if it were the sole petitioner, for unless otherwise indicated the petitioner Lorillard stands in no different position.

. The Commission “assumed” that without the support of either petitioner the plan of the broadcasting companies would have been unprofitable and of short duration. This assumption is based upon the Commission’s finding that each petitioner provided the “sole” financial support of the plan. This finding is unsupported by any evidence and is untenable on it face. Actually, the plan was availed of by eight other companies in addition to petitioner. (Fn. 1, Opinion of the Court). ABO sold an aggregate of advertising under its plan of $2,173,514.19, of which General Foods bought $157,211.01; CBS sold $1,057,-470.03, of which General Foods bought $182,497.12; and NBC sold $1,247,408, of which General Foods bought $81,520.

. If the mere right to designate products for in-store promotions (as distinct from the actual designation) is deemed to be a service or facility furnished by the chains to petitioner, then, under the Commission’s interpretation of the Act, the failure of petitioner to designate products -would not have exonerated petitioner from a § 2(d) violation.

. Section 2(o) of the Clayton Act, 15 U.S.C.A. § 13(e), reads:
“(e) It shall be unlawful for any person to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all purchasers on proportionally equal terms.”

. Section 2(a) of the Clayton Act, 15 U.S.C.A. § 33(a) reads in part:
“(a) It shall bo unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the *448District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: * * * ”