Court Opinion

ID: 9449573
Source: CourtListenerOpinion
Date Created: 2023-08-04 16:15:49.63278+00
Date Added: 2024-06-11T17:31:53.435741
License: Public Domain

HASTINGS, Chief Judge
(dissenting).
With deference to the analysis of the record as extensively reviewed in the majority opinion, I feel compelled to dissent from the holding therein.
The majority holding is based upon its rejection of the findings and conclusions of the Federal Trade Commission and substitution therefor of the findings and conclusions of the hearing examiner. This calls into play a consideration of the relationship in law between the Commission and its hearing examiner.
*838After an exhaustive review of the relevant precedent on this subject, Professor Davis in his Administrative Law Treatise reaches a conclusion with which I find myself in agreement:
“The final distillation from the case law is that the primary fact-finder is the agency, not the examiner ; that the agency retains ‘the power of ruling on facts * * * in the first instance’; that the agency still has ‘all the powers which it would have in making the initial decision’; that the examiner is a subordinate whose findings do not have the weight of the findings of a district judge; that the relation between examiner and agency is not the same as or even closely similar to the relationship between agency and reviewing court; that the examiner’s findings are nevertheless to be taken into account by the reviewing court and given special weight when they depend upon demeanor of witnesses; and that the examiner’s findings probably have greater weight than they did before the adoption of the APA [Administrative Procedure Act].” 2 Davis, Administrative Law, § 10.04, at 26 (1958).
In this respect, I believe the majority to be in error. I cannot say that the findings and conclusions of the Commission do not have substantial support in the record. There can be little dispute concerning the material facts in this case. No questions of credibility have been raised. The real controversy arises from the legal conclusions to be drawn from the evidence. I would credit the judgment and experience of the Commission over that of the hearing examiner.
It is agreed that the dealer contract in question provides for an exclusive franchise to the dealer for the sale of petitioner’s products to the mechanic trade “only within the territory described below [in the contract] and under the conditions hereinafter outlined.” (Emphasis added.)
At the outset, by the language of the contract the exclusive territorial limitation is made contingent upon the observance of the other restrictions by use of the clause “under the conditions hereinafter outlined.” This means to me, as the Commission determined, that the contract and the conditions outlined therein should be considered as an integral over-all nationwide sales distribution plan. The agreement should not be fragmented but is to be considered as a whole.
The four restrictions in the dealer contract under attack relate to exclusive territorial markets, customer limitation, resale price-fixing and a covenant prohibiting a dealer’s right to compete after contract termination.
Of these four restrictions, only those concerning the exclusive territorial arrangements and the customer limitation present any genuine controversy.
With reference to price-fixing, petitioner submits “that the Hearing Examiner’s finding that Petitioner had completely discontinued its policy of resale price maintenance and that there was no reasonable prospect of resumption was supported by the overwhelming weight of the evidence * * * [and that] the Examiner should have been sustained in dismissing the charge as moot.” Petitioner eliminated the fair trade clause from its dealer contracts in June, 1958. The majority opinion here concedes that without the fair trade clause resale price maintenance agreements are illegal per se.
In June, 1958, petitioner also eliminated the restrictive covenant from its dealer contracts. It now argues that it had abandoned both the fair trade clause and the restrictive covenant and contends that both issues are moot.
Without engaging in a discussion of the issue of mootness and considering the many cases outlawing price-fixing generally, it is my conviction that the Commission acted within the wide discretion allowed when it ordered petitioner to cease and desist from these two practices.
*839The restriction concerning the limitation of customers appears both in the contract and in instances not specified therein. The majority rationalizes that the few instances cited were those of large industrial contracts and that an analysis of each instance shows at most “a de minimus restraint on competition.” Believing as I do that the practice of reserving certain industrial customers to itself was a part of petitioner’s integrated sales distribution plan, I conclude that we should accept the evaluation of the Commission concerning the effect on competition of this limitation and the necessity for its prohibition. It seems well settled that reasons of business convenience or necessity may not be accepted as legitimate grounds for avoiding the proscriptions of the Federal Trade Commission Act. 15 U.S.C.A. § 45. As Mr. Justice Clark pointed out in his dissent in White Motor Co. v. United States, 372 U.S. 253, 280, 83 S.Ct. 696, 711, 9 L.Ed.2d 738 (1963), the restriction on the withholding of customers has been held “to be illegal as a contract between potential competitors not to compete,” citing United States v. McKesson & Robbins, Inc., 351 U.S. 305, 312, 76 S.Ct. 937, 100 L.Ed. 1209 (1956).1
We find in the exclusive territorial restriction a vertical arrangement by a manufacturer restricting the territory to be served by each dealer. The issue is whether such vertical arrangement can be equated with horizontal divisions of markets now held to be illegal per se. The recent holding in White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963), requires us now to look at the record to determine whether the territorial and customer limitations are valid, a hearing thereon having already been held by the Commission. The majority in White Motor intimated no views on the merits of this controversy, merely holding that the legality of such vertical limitations “should be determined only after a trial.” Id. at 264, 83 S.Ct. at 702.
In his concurring opinion, Mr. Justice Brennan made two references to the Commission’s final opinion in the instant case. Snap-On Tools Corp., FTC Docket No. 7116, 3 CCH Trade Reg. Rep. ¶ 15,546. In footnote 6, page 268, of 372 U.S., page 704 of 83 S.Ct., the reference is to “an elaboration and discussion of some of the factors which might enter such an inquiry.” The second reference is to the consideration of the use of “an assignment of areas of primary responsibility to each distributor” as a lawful means of serving the legitimate business needs of the manufacturer, with less damage to competition, in lieu of the territorial limitations. White Motor Co. v. United States, supra, 372 U.S. at 271, 83 S.Ct. at 706.
The Commission’s decision in the instant case was handed down prior to the Supreme Court’s holding in White Motor. Unlike the Antitrust Division there, the Commission here chose not to contend for a per se rule but elected to prove its charges. We ordered and heard a reargument of this appeal after the Supreme Court’s decision in White Motor. The voluminous record of the Commission hearing indicates compliance in that respect with the mandate in White Motor.
The Commission has evaluated the record and made its own findings and conclusions based thereon. I would credit the Commission’s action in this regard, rather than substitute for it the findings and conclusions of its hearing examiner, which the Commission rejected a second time.
Letting the Commission’s action speak for itself, I would approve the Commission’s findings and conclusions and enforce its order issued November 1, 1961, for the reasons generally stated in its unanimous opinion filed by Commissioner Elman.

. In White Motor, there was no appeal from the holding that resale price-fixing is illegal.