333 U.S. 683 (1948), 23, Federal Trade Commission v. Cement Institute

Docket Nº:No. 23
Citation:333 U.S. 683, 68 S.Ct. 793, 92 L.Ed. 1010
Party Name:Federal Trade Commission v. Cement Institute
Case Date:April 26, 1948
Court:United States Supreme Court
 
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Page 683

333 U.S. 683 (1948)

68 S.Ct. 793, 92 L.Ed. 1010

Federal Trade Commission

v.

Cement Institute

No. 23

United States Supreme Court

April 26, 1948

Argued October 20-21, 1947

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

The Federal Trade Commission instituted a proceeding before itself against an unincorporated trade association composed of corporations which manufacture, sell, and distribute cement; corporate members of the association, and officers and agents of the association. The complaint charged: (1) that respondents had engaged in an unfair method of competition in violation of § 5 of the Federal Trade Commission Act by acting in concert to restrain competition in the sale and distribution of cement through use of a multiple basing point delivered-price system, which resulted in their quoting and maintaining identical prices and terms of sale for cement at any given destination, and (2) that this system of sales resulted in price discriminations violative of § 2 of the Clayton Act, as amended by the Robinson-Patman Act. Upon a hearing and findings, the Commission ordered respondents to cease and desist from any concerted action to do specified things, including use of the multiple basing point delivered-price system to maintain identical prices for cement.

Held:

1. The Commission has jurisdiction to conclude that conduct tending to restrain trade is an unfair method of competition violative of § 5 of the Federal Trade Commission Act, even though the self-same conduct may also violate the Sherman Act. Pp. 689-693.

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2. The legislative history of the Federal Trade Commission Act shows that the purpose of Congress was not only to continue enforcement of the Sherman Act by the Department of Justice and the federal courts, but also to supplement that enforcement through the administrative process of the Federal Trade Commission. Pp. 692-693.

3. The filing by the United States of a civil action in a federal district court to restrain the respondents and others from violating § 1 of the Sherman Act, though based largely on the same alleged misconduct as in the Commission proceeding, does not require that the Commission proceeding be dismissed. Pp. 693-695.

4. Since all of the respondents were charged with combining to maintain a delivered-price system in order to eliminate price competition in interstate commerce, some who sold cement in intrastate commerce exclusively were nevertheless subject to the jurisdiction and order of the Commission. Pp. 695-696.

5. The Commission was not disqualified to pass upon the issues involved in this proceeding, even assuming that the members of the Commission, as a result of its prior ex parte investigations, had previously formed the opinion that the multiple basing point system operated as a price-fixing restraint of trade violative of the Sherman Act. Pp. 700-703.

6. It was not a denial of due process for the Commission to act in these proceedings after having expressed the view that industrywide use of the basing point system was illegal. Tumey v. Ohio, 273 U.S. 510, distinguished. Pp. 702-703.

7. Although the alleged combination be treated as having had its beginning in 1929, evidence of respondents' activities during years long prior thereto and during the NRA period was admissible for the purpose of showing the existence of a continuing combination among respondents to utilize the basing point pricing system. Pp. 703-706.

(a) The Commission's consideration of respondents' pre-1929 and NRA code activities was within the rule that testimony as to prior or subsequent transactions, which for some reason are barred from forming the basis for a suit, may nevertheless be introduced if it tends reasonably to show the purpose and character of the particular transactions under scrutiny. Pp. 704-705.

(b) Administrative agencies such as the Commission are not restricted by rigid rules of evidence. Pp. 705-706.

(c) A letter written prior to the filing of the complaint by one, since deceased, who was president of a respondent company

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and an active trustee of the association, in which he stated that free competition would be ruinous to the cement industry, was admissible in evidence even though the statement may have been only the writer's conclusion. P. 706.

8. Cement Mfrs. Protective Assn. v. United States, 268 U.S. 588, is not decisive of the issues in the present case. Pp. 706-709.

9. Individual conduct or concerted action may fall short of violating the Sherman Act and yet constitute an "unfair method of competition" prohibited by the Federal Trade Commission Act. P. 708.

10. The Commission made adequate findings that respondents collectively maintained a multiple basing point delivered-price system for the purpose of suppressing competition. Pp. 709-712.

11. There was substantial evidence to support these findings. Pp. 712-720.

12. Maintenance by concerted action of the basing point delivered-price system employed by respondents is an unfair trade practice prohibited by the Federal Trade Commission Act. Pp. 720-721.

13. Respondents' multiple basing point delivered-price system resulted in price discriminations between purchasers, in violation of § 2 of the Clayton Act as amended by the Robinson-Patman Act. Corn Products Co. v. Federal Trade Comm'n, 324 U.S. 726; Federal Trade Comm'n v. Staley Co., 324 U.S. 746. Pp. 721-726.

14. The differences in respondents' net returns from different sales in different localities, resulting from use of the multiple basing point delivered-price system, were not justifiable under § 2(b) of the amended Clayton Act as price discriminations "made in good faith to meet an equally low price of a competitor." Pp. 721-726.

15. The objections to the form and substance of the Commission's order are without merit. Pp. 726-730.

157 F.2d 533 reversed.

A cease and desist order issued by the Federal Trade Commission in proceedings against respondents under the Federal Trade Commission Act and the amended Clayton Act was set aside by the Circuit Court of Appeals. 157 F.2d 533. This Court granted certiorari. 330 U.S. 815816. Reversed, p. 730.

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BLACK, J., lead opinion

MR. JUSTICE BLACK delivered the opinion of the Court.

We granted certiorari to review the decree of the Circuit Court of Appeals which, with one judge dissenting, vacated and set aside a cease and desist order issued by the Federal Trade Commission against the respondents. 157 F.2d 533. Those respondents are: The Cement Institute, an unincorporated trade association composed [68 S.Ct. 797] of 74 corporations1 which manufacture, sell and distribute cement; the 74 corporate members of the Institute;2 and 21 individuals who are associated with the Institute. It took three years for a trial examiner to hear the evidence, which consists of about 49,000 pages of oral testimony and 50,000 pages of exhibits. Even the findings and conclusions of the Commission cover 176 pages. The briefs, with accompanying appendixes submitted by the parties, contain more than 4,000 pages. The legal questions raised by the Commission and by the different respondents

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are many and varied. Some contentions are urged by all respondents, and can be jointly considered. Others require separate treatment. In order to keep our opinion within reasonable limits, we must restrict our record references to the minimum consistent with an adequate consideration of the legal questions we discuss.

The proceedings were begun by a Commission complaint of two counts. The first charged that certain alleged conduct set out at length constituted an unfair method of competition in violation of § 5 of the Federal Trade Commission Act. 38 Stat. 719, 15 U.S.C. § 45. The core of the charge was that the respondents had restrained and hindered competition in the sale and distribution of cement by means of a combination among themselves made effective through mutual understanding or agreement to employ a multiple basing point system of pricing. It was alleged that this system resulted in the quotation of identical terms of sale and identical prices for cement by the respondents at any given point in the United States. This system had worked so successfully, it was further charged, that, for many years prior to the filing of the complaint, all cement buyers throughout the nation, with rare exceptions, had been unable to purchase cement for delivery in any given locality from any one of the respondents at a lower price or on more favorable terms than from any of the other respondents.

The second count of the complaint, resting chiefly on the same allegations of fact set out in Count I, charged that the multiple basing point system of sales resulted in systematic price discriminations between the customers of each respondent. These discriminations were made, it was alleged, with the purpose of destroying competition in price between the various respondents in violation of § 2 of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526. That section, with

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certain conditions which need not here be set out, makes it

unlawful for any person engaged in commerce, . . . either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality. . . .

15 U.S.C. § 13.

Resting upon its findings, the Commission ordered that respondents cease and desist from "carrying out any planned common course of action, understanding, agreement, combination, or conspiracy" to do a number of things, 37 F.T.C. 97, 258-262, all of which things, the Commission argues, had to be restrained in order effectively to...

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