Anheuser-Busch, Inc. v. FTC, 12284.
| Citation | 265 F.2d 677 |
| Decision Date | 13 April 1959 |
| Docket Number | No. 12284.,12284. |
| Parties | ANHEUSER-BUSCH, INC., a Missouri corporation, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Edgar Barton, New York City, Charles M. Price, Chicago, Ill. (Robert C. Keck, Chicago, Ill., Edward Wolfe, New York City, Dwight Ingamells, St. Louis, Mo., MacLeish, Spray, Price & Underwood, Chicago, Ill., White & Case, New York City, on the brief), for petitioner.
Earl W. Kintner, Gen. Counsel, Federal Trade Commission, Washington, D. C. (James E. Corkey, Asst. Gen. Counsel, Francis C. Mayer, Carleton A. Harkrader, Washington, D. C., on the brief), for Federal Trade Commission.
Before DUFFY, Chief Judge, and SCHNACKENBERG and KNOCH, Circuit Judges.
By its petition, Anheuser-Busch, Inc., a Missouri corporation, herein referred to as AB, asks us to review and set aside a cease and desist order issued on September 10, 1957 by the Federal Trade Commission, based upon a complaint charging AB with a violation of section 2(a) of the Clayton Act as amended by the Robinson-Patman Act.1 15 U.S.C.A. § 13(a).
In its brief, the Commission states that AB was charged in the complaint with territorial price discrimination. The complaint alleged two price reductions on its beer products made by AB to retailers in the St. Louis, Missouri area during 1954, resulting in substantially lower prices to its customers there than to its customers located elsewhere in the United States. AB's answer consisted in part of a denial and contained an affirmative defense that the reductions were made in good faith to meet the equally low prices of competitors. See section 2(b) of the Clayton Act, amended as aforesaid, 15 U.S.C.A. § 13 (b).2
Following hearings before an examiner, he entered an initial decision, in which he made findings of fact and concluded that AB had violated section 2(a) as charged, and entered a provisional order. The Commission issued its final order now before us, adopting the findings and conclusions of the examiner,3 and filed its opinion.
The evidence is not in substantial conflict. As found by the examiner, the controlling facts which we deem material here are, in summary, as follows:
At all times relevant in this case, AB, a manufacturer of beers, including Budweiser, sold its beers on a nationwide basis, in competition with other brewers in commerce. AB and four other named breweries selling on a nationwide basis, sold and shipped into all states. They were known as national brewers and their products as national beers. There were throughout the country a number of beers having merely local or regional distribution.
There were many separate marketing areas for beer in the country. Each market had a distinct pattern of prices and the prices charged for the same beers varied among the different marketing areas. While it appears that there was no uniform or constant differential, in the great majority of markets Budweiser and the other national beers were sold at some price higher than the price charged for beers having merely regional or local distribution.
In 1953, a strike closed the plants of the other four national brewers and AB became the nation's leading producer. After the strike, the national brewers generally increased prices, though in varying amounts depending on locality. However, neither AB nor its three local or regional competitors in the St. Louis area4 increased their prices on sales in the St. Louis market.
On January 4, 1954 and June 21, 1954, AB reduced its prices on Budweiser beer in the St. Louis market to practically equal those charged for local and regional beers there. These reductions AB did not make elsewhere.
These price cuts, the Commission held, constituted a discrimination in price "as between purchasers differently located". The examiner found, and the Commission concurred, that these price "discriminations" had the effect of diverting substantial business to AB from its competitors in the St. Louis market; the effect of substantially lessening competition in the line of commerce in which AB and its local competitors "are engaged"; and the further effect of tending to create a monopoly and having the potentialities to continue to do so.
We find it unnecessary to determine whether the evidence proved the effects to which the Commission alluded, or whether the evidence established AB's affirmative defense of good faith.
The Commission makes it clear that no complaint is made by it as to AB's regular practice of selling its beer at different prices in the different markets of the country. It says:
We are confronted here with the basic question of whether AB's price cuts in the St. Louis area, which, as contended by the Commission, disrupted that market to the injury of its local competitors in that market, were price discriminations within the proscription of section 2(a). Even if we assume that these cuts were directed at AB's local competitors, they were not discriminatory. AB did not thereby discriminate among its local competitors in the St. Louis area. By its cuts AB employed the same means of competition against all of them. Moreover, it did not discriminate among those who bought its beer in the St. Louis area; all could buy at the same prices. We have here, as far as the St. Louis area is concerned, a nondiscriminatory pricing activity, as to which the affirmative defense of good faith becomes relevant only if the price cuts constituted a violation of section 2(a).
Actually the only discrimination claimed is said to result from AB's St. Louis price cuts when it failed to make similar cuts in other areas. But it is significant that the Commission is not seeking to protect AB's competitors in the other areas. In fact the Commission does not even say that they have been injured. In effect, the situation is that, while the cuts were discriminatory against AB's competitors only in other areas (about which there is no complaint by the Commission) and the effects on AB's local competitors in the St. Louis area were not discriminatory as among them, the Commission argues that section 2(a) can be used "to stop a predatory pricing practice" in that area. However, it is not every price difference that amounts to a discrimination in price under the Act. Price discrimination means more than a mere difference in price. There must be some relationship between the different purchasers which entitles them to comparable treatment. Inasmuch as the Commission admits that the prices charged in the St. Louis area, on the one hand, and in other areas, on the other hand, were different and that this difference is not the subject of its complaint, it is clear that the mere fact of difference in price resulting from difference of markets, is not price discrimination under the Act. The Commission complains only about the lowering of the price in one area while the prices in all other areas are maintained, albeit the maintained prices might be different from those charged in the area where the lowering took place. But Representative Utterback, a manager of the conference bill which became section 2(a) (80 Cong. Rec. 9416), stated:
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