Great Atlantic & Pacific Tea Co. v. FEDERAL TRADE COM'N
| Decision Date | 22 September 1939 |
| Docket Number | No. 6734.,6734. |
| Citation | 106 F.2d 667 |
| Parties | GREAT ATLANTIC & PACIFIC TEA CO. v. FEDERAL TRADE COMMISSION. |
| Court | U.S. Court of Appeals — Third Circuit |
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Caruthers Ewing, of New York City (Watson, King & Brode and Feldman & Kittelle, all of Washington, D. C., of counsel), for petitioner.
Joseph J. Smith, Jr., of Washington, D. C., W. T. Kelley, Chief Counsel, Federal Trade Commission, and Joseph J. Smith, Jr., Wilbur N. Baughman, and John Darsey, all of Washington, D. C., Sp. Attys., for respondent.
Before BIGGS and MARIS, Circuit Judges, and KALODNER, District Judge.
The petitioner, The Great Atlantic & Pacific Tea Company, seeks to have this court set aside an order of the Federal Trade Commission entered on January 25, 1938, requiring the petitioner to cease and desist from certain alleged violations of Section 2(c) of the Clayton Act, as amended by the Robinson-Patman Act, Act of June 19, 1936, c. 592, 49 Stat. 1526, 15 U.S.C.A. § 13(c). The order referred to is set out as an appendix to this opinion.
The petitioner relies on three assignments of error. These are as follows: (1) That the Commission erred in finding that "No brokerage or selling services whatsoever, or any other form of services in connection with the purchase of supplies by, or the sale thereof to, the Respondent are intended to be or are rendered to sellers by the Respondent or by any agents or employees of the Respondent"; (2) that the Commission erred as a matter of law in holding that the petitioner is not entitled to an allowance or discount reflecting alleged savings to sellers of brokerage or services in lieu of brokerage; and (3) that the Commission erred in finding "* * * that the acceptance of discounts in lieu of brokerage by the Respondent tends to injure competition between the Respondent and its competitors, and does injure competition between sellers who grant such discounts and allowances to the Respondent and those who do not".
Since questions of fact as well as law are presented for our consideration, we will deal first with the facts. There is no doubt, as this court stated in Federal Trade Commission v. Artloom Corporation, 3 Cir., 69 F.2d 36, 37, 38, that "The fact findings of the Commission, if supported by testimony, shall be conclusive." See Federal Trade Commission v. Algoma Lumber Company, 291 U.S. 67, 73, 54 S.Ct. 315, 78 L.Ed. 655; Federal Trade Commission v. Standard Education Society, 302 U.S. 112, 117, 58 S.Ct. 113, 82 L.Ed. 141; and Minter v. Federal Trade Commission, 3 Cir., 102 F. 2d 69, 70. It is also the law that the "* * * weight to be given to the facts and circumstances admitted as well as the inferences reasonably to be drawn" from such facts and circumstances are for the Commission, Federal Trade Commission v. Pacific States Paper Trade Association, 273 U.S. 52, 63, 47 S.Ct. 255, 258, 71 L.Ed. 534, and that courts will not "* * * pick and choose bits of evidence to make findings of fact contrary to the findings of the Commission," Federal Trade Commission v. Standard Education Society, supra, 302 U.S. at page 117, 58 S.Ct. at page 116, 82 L.Ed. 141. The duty of this court, therefore, in examining the findings of fact of the Commission is to ascertain whether or not such findings have support in the record before the Commission.
The Facts.
The petitioner is engaged in the retail grocery business and in conjunction with its affiliates operates more than 14,800 retail grocery stores located throughout the United States. Naturally, it competes with other chain grocery stores and with individuals or corporations operating grocery stores locally within the areas where the petitioner does business. The petitioner has divided the country into six geographical divisions. Each division in turn is divided into a number of units. Each unit contains a warehouse. Each division has a purchasing director. Each warehouse also employs a purchasing director or buyer. The purchasing directors and the warehouse buyers have the authority to purchase the commodities and products required by the petitioner to maintain its many stores.
In addition to the foregoing, the petitioner maintains a number of central buying offices. These are located in key cities, as, for example, in New Orleans, Baltimore and San Francisco. These central buying offices are in charge of agents of the petitioner. The salaries of these agents are paid by the petitioner as are the expenses of maintaining the offices. The Commission found as a fact that the duties of these agents consist of continuously searching for and finding sources of supply for the petitioner's stores, of furnishing the petitioner with market information, and of purchasing commodities for the petitioner.1 The field buyers have no authority to make purchases except upon the instructions of the purchasing directors and the warehouse buyers. The field buyers are constantly in touch with these officers however. The Commission also found as a fact that prior to June 19, 1936, the petitioner designated these agents as "brokers"; next referred to them as "purchasing agents"; next as "field buying agents" or simply as "buyers".2 They are in fact field contact men who are and remain in touch with sellers and prospective sellers of commodities. Their duties in no wise changed with their change of name.
It is in respect to the duties, obligations and labors of these buyers or field buying agents that the controversy at bar arises. The petitioner points out that the field buyers furnish sellers with certain services. For example, the record shows that they exchange information as to market conditions with sellers. They visit manufacturing establishments and advise managers as to methods whereby the quality of commodities may be improved. They also advise manufacturers as to the sizes of containers. They furnish sellers with traffic information as to the routing of commodities purchased by the petitioner. When sellers are threatened with a glut of commodities which may break the market, the field buying agents call the existence of such conditions to the attention of the divisional purchasing directors who endeavor to relieve the glut by buying commodities.
The petitioner contends that these services are of great value and exceed those customarily rendered by brokers, and takes the position that these field buying agents "perform substantially the same services and functions as a broker, namely, to bring buyer and seller together; to act as intermediary and to serve both" and that sellers did not sell "to the field man but through him, and that, in consequence, their sales to the petitioner were not direct sales."3 The petitioner also contends that one of the outstanding services rendered by the field buying agents is in preventing sellers from selling their products or commodities at too low a price. The Commission found as a fact, however, that "the loyalty and allegiance" of the field buying agents "are due solely to the Respondent and in all matters and transactions participated in by said field buying agents relative to or in connection with the business of Respondent or the purchase of commodities by or the sale thereof to the Respondent, said field buying agents devote their loyalty and allegiance solely to the Respondent."4
It is clear that prior to June 19, 1936, the effective date of the Robinson-Patman Act, the sellers paid brokerage to the field buying agents of the petitioner in the same amounts as were paid by the sellers to brokers acting as agents for such sellers. Such brokerage was received by the field buying agents on behalf of the petitioner and was paid by them to the petitioner.
Within a comparatively short time after June 19, 1936, the petitioner issued new instructions to its field buying agents. These instructions provided that the field buyers should accept no further brokerage from the sellers on purchases of commodities and should make all future purchases for the petitioner on one of three bases. These bases required the field buying agents to adopt one of the following methods in dealing with sellers: (1) To purchase commodities and products for the petitioner for a net price which was to reflect a reduction from the sellers' prices to other customers or from the general market price, this reduction reflecting in amounts brokerage paid by the sellers to the field buying agents of the petitioner prior to June 19, 1936, being also amounts equivalent to amounts currently paid by the sellers to brokers; (2) to execute "quantity discount agreements" with the sellers, these agreements providing for payment to the petitioner monthly as a "quantity discount" an amount equal to the brokerage paid monthly by the sellers to the field buying agents prior to June 19, 1936; and (3) if the sellers were unwilling to sell on the conditions imposed by (1) and (2) above, to make an agreement with sellers whereby the sellers were to keep a record of the brokerage which they would have paid to the field buying agents prior to June 19, 1936 and to pay into escrow or to set up in "abeyance accounts" on their books sums equivalent to such brokerage until the legality of making payments covering such amounts should be determined in the light of the Robinson-Patman Act.
The record shows the purchase by the petitioner of commodities in interstate commerce on each of the three bases enumerated. In respect to basis (2), supra, it also appears that some agreements were made to operate retroactively from the dates of execution to June 19, 1936. It further appears that while the quantity discount agreements purported to require the petitioner to purchase specified quantities of commodities in order that the discount might be earned, there is evidence that the petitioner received discounts whether the quantity purchasing provisions of the contracts were fulfilled or not.5
Other findings of fact of the Commission must be...
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