Automatic Canteen Co. v. Ftc, 346 U.S. 61 (1953)

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Author: Justice Douglas

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Automatic Canteen Co. v. Ftc, 346 U.S. 61 (1953)

MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK and MR. JUSTICE REED concur, dissenting.

This decision is a graphic illustration of the way in which a statute can read with enervating effect.

Section 2(b) of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. § 13(b), provides that, where proof is made that there has been

discrimination in price or services or facilities furnished, the burden of rebutting the prima facie case thus made by showing justification shall be upon the person charged with a violation of this section, and, unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination. . . .

(Italics added.)

Section 2(f) makes it unlawful "for any person" engaged in commerce "knowingly to induce or receive a discrimination in price which is prohibited by this section." (Italics added.)

The words "the person charged," as used in § 2(b), and the words "any person," used in § 2(f), plainly include buyers, as well as sellers.

The nature of the discrimination condemned is made clear in § 2(a). It outlaws discrimination "in price between different purchasers of commodities of like grade and quality" where the effect is substantially to prevent or lessen competition or tend to create a monopoly as respects any person "who either grants or knowingly receives the benefit of such discrimination." But it permits price differentials

which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities

in which the commodities are sold or delivered.

In the present case, the Court determines that, even though a "buyer knew that the price was lower," such knowledge is insufficient to "shift the burden of introducing evidence to the buyer." But § 2(b) requires the person shown to practice a discrimination to establish a justification. Section 2(f) was intended to make clear that the same bans and burdens are on a knowing buyer obtaining discriminatory prices, as we held in Federal Trade Commission v. A. E. Staley Mfg. Co., 324 U.S. 746, 759-760, approved in Standard Oil Co. v. Federal Trade Commission, 340 U.S. 231, are on a knowing seller who grants them.

The record shows persistent and continuous efforts of this large buyer in wheedling and coercing suppliers into granting it discriminatory prices. The Commission summarized petitioner’s activities in far more sedate terms than their bizarre nature justified:

Respondent used various methods to induce its suppliers to grant discriminatory prices. One of these was to inform prospective suppliers of the prices and terms of sale which would be acceptable to the respondent without consideration or inquiry as to whether such supplier could justify such a price on a cost basis or whether it was being offered to other customers of the supplier. At other times, the respondent refused to buy unless the price to it was reduced below prices at which the particular supplier sold the same merchandise to others. In other instances, respondent sought to explain to the prospective supplier that certain alleged savings would accrue to the supplier in selling to respondent, or that certain elements of the supplier’s cost could be eliminated, which would, in respondent’s opinion, justify a lower price. In carrying out this form of inducement, respondent would advise a supplier or prospective supplier of the price which it considered "standard price." In letters written to the Curtiss Candy Company on November 15, 1939, and to W. F. Schrafft & Sons Corporation on February 15, 1937, respondent summarized alleged savings to these companies as follows:

<LW:21> Curtiss Schrafft

<LW:21> Alleged Savings Co. Corp.

<LW:21> -------------------------------------- ------- ---------

<LW:21> (1) Freight savings of 6% 5% to 7%

<LW:21> (2) Sales cost savings of 7% 7%

<LW:21> (3) 24-count cartons savings of 5% 5%

<LW:21> (4) Return and allowances savings of 1% 1% to 2%

<LW:21> (5) Free deals and samples savings of 8% 2% to X%

<LW:21> (6) Shipping containers savings of .... 1% to 2%

<LW:21> ---- ----------

<LW:21> Total deductions 27% 21% to 25%

Respondent advised these companies that such alleged savings could be made because of the method by which respondent made purchases and because certain services could be eliminated in selling of it.

There is no doubt that the large buyers wield clubs that give them powerful advantages over the small merchants. Often, large merchants gain advantages over other sellers of the same merchandise by obtaining price concessions by pressure on their suppliers. The evil was acknowledged in Federal Trade Commission v. Morton Salt Co., 334 U.S. 37, 43. The Congress plainly endeavored to curb the buyer in the kind of activities disclosed by this record. As the House Report reveals, the line sought to be drawn was between those who incidentally receive discriminatory prices and those who actively solicit and negotiate them. H.R.Rep. No. 2951, 74th Cong., 2d Sess., pp. 5-6.

The Court disregards this history. The Court’s construction not only requires the Commission to show that the price discriminations were not justified; it also makes the Commission prove what lay in the buyer’s mind. I would let the acts of the buyer speak for themselves. Where, as here, the buyer undertakes to bludgeon sellers into prices that give him a competitive advantage, there is no unfairness in making him show that the privileges he demanded had cost justifications. This buyer over and again held itself out as a cost expert.* I would hold it to its professions. Since it was the coercive influence, there is no unfairness in making it go forward with evidence to rebut the Commission’s prima facie case.

* A reading of the record leaves no doubt that petitioner knew in numerous instances that it was squeezing a price from the seller which was less than the seller’s costs.

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Chicago: Douglas, "Douglas, J., Dissenting," Automatic Canteen Co. v. Ftc, 346 U.S. 61 (1953) in 346 U.S. 61 346 U.S. 83–346 U.S. 85. Original Sources, accessed February 29, 2024, http://www.originalsources.com/Document.aspx?DocID=855GUCQTPKZYRP4.

MLA: Douglas. "Douglas, J., Dissenting." Automatic Canteen Co. v. Ftc, 346 U.S. 61 (1953), in 346 U.S. 61, pp. 346 U.S. 83–346 U.S. 85. Original Sources. 29 Feb. 2024. http://www.originalsources.com/Document.aspx?DocID=855GUCQTPKZYRP4.

Harvard: Douglas, 'Douglas, J., Dissenting' in Automatic Canteen Co. v. Ftc, 346 U.S. 61 (1953). cited in 1953, 346 U.S. 61, pp.346 U.S. 83–346 U.S. 85. Original Sources, retrieved 29 February 2024, from http://www.originalsources.com/Document.aspx?DocID=855GUCQTPKZYRP4.